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Frank's Fitness is assessing the profitability of three segments: gym memberships, personal training, and classes. The financials are: Segment Revenue Direct Costs Gym Memberships $500,000

Frank's Fitness is assessing the profitability of three segments: gym memberships, personal training, and classes. The financials are:

Segment

Revenue

Direct Costs

Gym Memberships

$500,000

$300,000

Personal Training

$200,000

$120,000

Classes

$80,000

$50,000

Frank is considering converting the classes area into an expanded personal training area.

Required: a. Determine the necessary increase in the personal training segment margin to maintain Frank’s Fitness’ current income. b. Discuss other considerations Frank should evaluate before deciding to eliminate the classes area to expand personal training.

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