Reference no: EM133534167

Question: Jethro recently fulfilled his long-time dream of opening a gym that offers spinning exercise classes for $10 per person. To differentiate his gym and better serve his clients, Jethro provides a towel, a bottle of water, and an after-work out protein shake to each person participating in a class, at a cost of $2.65 per person. Jethro employs four part-time instructors and pays them each $1,500 per month. He also pays himself a monthly salary of $6,500. Jethro's other monthly costs are $1,800 for rent, $1,350 for depreciation on his 30 bikes, and $1,425 in utilities and insurance.

Required:

(a) What is Jethro's contribution margin per unit?

(b) What is Jethro's contribution margin ratio?

(c) Prepare Jethro's monthly contribution format income statement. Assume that he teaches 4,500 clients