Question
Pierre and Anja own Hercules Health Club. An individual membership costs $100 per month. Pierre and Anja estimate variable costs at $40 per member month
Pierre and Anja own Hercules Health Club. An individual membership costs $100 per month. Pierre and Anja estimate variable costs at $40 per member month and fixed costs at $40,020 per month. They currently have 950 members.
a. What is Herculess monthly profit equation? b. How many members does Hercules need to break even? What does this translate to in revenue? (Break-Even point in sales dollars) c. Suppose Hercules pays income taxes that amount to 35% of income. How many members does Hercules need to report after-tax profits of $11,700? d. Using the contribution margin ratio, calculate the revenues required to earn an after-tax profit of $11,700. e. What is Herculess margin of safety? (Units and Dollars)
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