Flavio'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. Flavio'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 at Flavio's Fitness Club?
A) $180,000
B) $210,000
C) $250,000
D) $290,000

Question

Flavio'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. Flavio'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 at Flavio's Fitness Club?
A) $180,000 
B) $210,000 
C) $250,000 
D) $290,000

Quizplus · Accepted Answer

Gross Profit = Revenue - Cost of Goods Sold (COGS)
- Monthly revenue from memberships = $400,000
- Revenue from personal training sessions = $100,000 x 50% = $50,000 (This is COGS)
- Revenue from nutrition products = $20,000
- Front desk staff wages = $60,000 (This is an operating expense, not COGS)
Gross Profit = $400,000 + $20,000 - $50,000 = $370,000
Therefore, the correct answer is Choice B with a Gross Profit of $370,000.

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