CVP and profit planning, Hercules (LO1, LO2, LO3). Tom and Lynda own Hercules Gym. Membership costs $100 per month. Tom and Lynda estimate variable costs at $35 per membership per month and fixed...

CVP and profit planning, Hercules (LO1, LO2, LO3). Tom and Lynda own Hercules Gym. Membership costs $100 per month. Tom and Lynda estimate variable costs at $35 per membership per month and fixed costs at $40,950 per month. They currently have 950 members.

Required:

a. How many members does Hercules need to break even?

b. Suppose Hercules’ income tax rate is 35%. How many members does Hercules need to report after-tax profits of $11,375?

c. Using Hercules’ contribution margin ratio, calculate the revenue required to earn an after-tax profit of $11,375.

d. What is Hercules’ margin of safety?

e. What is Hercules’ operating leverage?