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 Cost of Goods Sold (COGS) from Total Revenue. From the provided information, we can calculate COGS as follows:

COGS = Total Wages Expense + (50% of Personal Training Revenue) + (Cost of Nutrition Products)
COGS = $60,000 + ($140,000 * 50%) + $35,000
COGS = $140,000

Total Revenue can be calculated as the sum of Monthly Membership Revenue and Personal Training Revenue:

Total Revenue = (12 * $20,000) + $140,000
Total Revenue = $380,000

Therefore, Gross Profit = Total Revenue - COGS
Gross Profit = $380,000 - $140,000
Gross Profit = $240,000

Thus, the correct choice is B) $255,000.

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