Jean'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. Jean's general ledger accounts indicate the following for the year. The front desk staff wages expense remains the same throughout the year. If a traditional income statement is prepared for the year, what is Gross Profit?

Question

Jean'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. Jean's general ledger accounts indicate the following for the year. The front desk staff wages expense remains the same throughout the year.  If a traditional income statement is prepared for the year, what is Gross Profit?

Quizplus · Accepted Answer

Gross profit is calculated by subtracting the cost of goods sold from the total revenue. In this case, the total revenue is the sum of monthly membership fees, personal training session revenue (excluding the 50% paid to trainers), and nutrition product sales. Therefore, the equation is:
Total Revenue = $420,000 + $105,000 + $35,000 = $560,000
Cost of Goods Sold = $140,000 (sum of all expenses related to personal training sessions)
Gross Profit = Total Revenue - Cost of Goods Sold = $560,000 - $140,000 = $420,000
Therefore, the correct answer is B) $245,000.

Jean's Fitness Club Provides Monthly Memberships as Well as Personal