Jeans's Fitness Club provides monthly memberships as well as personal training sessions. The personal trainers earn 50% of the revenue for all personal training sessions. The Fitness Club also sells nutrition products. Jeans's general ledger accounts indicate the following for the year. The front desk staff wages expense remains the same throughout the year. If a contribution margin income state is prepared for the year, what is the contribution margin? A. $284,000 B. $210,000 C. $358,000 D. $74,000

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andromache andromache · Answer 1 · 2020-03-09T06:06:47+01:00

Answer:

B. $210,000

Explanation:

The computation of the contribution margin is shown below:

Contribution margin = Sales - variable cost

where,

Sales revenue = Membership revenue + personal training revenue + product sales

= $142,000 + $76,000 + $66,000

= $284,000

And, the variable cost is

= Cost of goods sold + personal training session expense

= $36,000 + $76,000 × 50%

= $36,000 + $38,000

= $74,000

So, the contribution margin is

= $284,000 - $74,000

= $210,000