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dem82 [27]
2 years ago
6

Anthony Herrera recently fulfilled his long-time dream of opening a gym that offers spinning exercise classes for $5.42 per pers

on. To differentiate his gym and better serve his clients, Anthony provides a towel, a bottle of water, and an after-workout protein shake to each person participating in a class, at a cost of $1.94 per person. Anthony employs three part-time instructors and pays them each $1,182 per month. He also pays himself a monthly salary of $4,100. Anthony’s other monthly costs are $1,570 for rent, $1,420 for depreciation on his 30 bikes, and $1,958 in utilities and insurance.
(a) What is Anthony’s contribution margin per unit? (Round answer to 2 decimal places, e.g. 52.75.)
(b) What is Anthony's contribution margin ratio?
Business
1 answer:
Alik [6]2 years ago
8 0

Answer:

(a) $3.48 per unit

(b) 64.2%

Explanation:

(a) Anthony’s contribution margin per unit:

= Selling price per unit - Variable cost per unit

= $5.42 - $1.94

= $3.48 per unit

Therefore, the Anthony’s contribution margin per unit is $3.48 per unit.

(b) Anthony's contribution margin ratio:

= (Contribution Margin Per unit ÷ Selling Price per unit) × 100

= ($3.48 per unit ÷ $5.42 per unit) × 100

= 0.6420 × 100

= 64.20%

Therefore, the Anthony's contribution margin ratio is 64.2%.

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Explanation:

Depreciation of an asset is the systematic allocation of estimated cost to an asset over time. It is added over the years to get the accumulated depreciation that is netted off the cost to get the net book value.

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