George Robinson 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, George provides a towel, a bottle of water, and an after-workout protein shake to each person participating in a class, at a cost of $1.90 per person. George employs four part-time instructors and pays themeach $2,500 per month. He also pays himself a monthly salary of $7,000. George's other monthly costs are $3,000 for rent, $2,000 for depreciation on his 34 bikes, and $1,775 in utilities and insurance.
George Robinson 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, George provides a towel, a bottle of water, and an after-workout protein shake to each person participating in a class, at a cost of $1.90 per person. George employs four part-time instructors and pays themeach $2,500 per month. He also pays himself a monthly salary of $7,000. George's other monthly costs are $3,000 for rent, $2,000 for depreciation on his 34 bikes, and $1,775 in utilities and insurance.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(a) What is George’s contribution margin per unit?
(b) What is George’s contribution margin ratio?
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