Question - Tom and Linda own Hercules Gym. An individual membership costs $100 per month. Tom and Linda estimate variable costs at $35 per member per month and fixed costs at $40,950 per month. They currently have 950 members.
a. How many members does Hercules need to break even?
b. Suppose Hercules pays income taxes that amount to 35% of income. How many members does Hercules need to report after tax profits of $11,375?
c. Using the contribution margin ratio, calculate that revenue required to earn an after-tax profit of $11,375.
d. What is Hercules' margin of safety?
e. What is Hercules' operating leverage?