Revenue budget, income statement, Hercules (LO2). Tom and Lynda own Hercules Health Club. They provide you with the following information regarding expected membership. You also know that the monthly...

Revenue budget, income statement, Hercules (LO2). Tom and Lynda own Hercules Health Club. They provide you with the following information regarding expected membership. You also know that the monthly fee for an individual membership is $100 and that the monthly fee for a family membership is $160. Variable costs are $35 and $60, respectively, for the individual and family membership. Fixed costs amount to $40,000 per month.

Required:


a. Prepare Hercules’ budgeted income statements for August and September.


b. Tom and Lynda are considering running an advertising campaign in August that will cost $10,000. If Tom and Lynda run the ads, they expect 10 more individual members to join and 5 additional family memberships (i.e., individual memberships for August and September are expected to be 710 and 700, respectively) Prepare Hercules’ budgeted income statements for August and September if Tom and Lynda run the advertising campaign.




May 26, 2022
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