Question

   Metro Health & Spa offers three membership programs: Platinum, Gold and Silver. Metro incurs annual fixed costs of $19,200,000.

Additional information about the programs is presented below:

Metro Health & Spa offers three membership programs: Platinum, Gold and Silver. Metro incurs annual fixed costs of $19,200,000. Additional information about the programs is presented below: Platinum Gold Silver 150.000 120.000 Memberships sold Membership price Variable cost per membership 30.000 $2,500 $1,000 $1,000 $800 $500 $200 4 Page 13. What is the weighted average unit contribution margin? 14. Assuming that the sales mix of memberships remains constant, what is the total number of memberships that the company must sell to break even? 15. What is the break-even point (in memberships) for the "Gold" membership?

13.What is the weighted-average unit contribution margin?

14. Assuming that the sales mix of memberships remains constant, what is the total number of memberships that the company must sell to break even?

15. What is the break-even point (in memberships) for the “Gold” membership?

Answer 1

13) Weighted average unit contribution margin

	Platinum	Gold	Silver
Membership price	2500	1000	800
Variable cost per membership	1000	500	200
Contribution margin	1500	500	600
Unit	10%	50%	40%
Weighted average	150	250	240

Weighted average unit contribution margin = 400+240 = 640

14) Break even = 19200000/640 = 30000 Units

15) Break even point in gold membership = 30000*50% = 15000 Units