George's Gym evaluates the profitability of three segments: membership fees, personal training, and merchandise. The financials...
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Accounting
George's Gym evaluates the profitability of three segments: membership fees, personal training, and merchandise. The financials are:
Segment | Revenue | Direct Costs |
Membership Fees | $500,000 | $300,000 |
Personal Training | $200,000 | $120,000 |
Merchandise | $90,000 | $50,000 |
George is considering converting the merchandise area into an expanded personal training area.
Required: a. Calculate the necessary increase in the personal training segment margin to maintain George’s Gym’s current income. b. Identify other considerations George should evaluate before deciding to eliminate the merchandise area to expand personal training.
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