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Chrome File Edit View History Bookmarks People Window Help 79% i . Tue 11:10 PM 2 C E ? Do Homework-lo X Solved: Computing X ( Solved: Computing Compute The Miss X Solved: Calculating X?Migos walk 117?× C secure https://www.mathxl.com/Studen aspx?homeworkid=482826537&questionid;=16&flushed-false;&cld;:5007142&back;=DoAssignmen.. ? a R 1 Financial and Managerial Accounting Homework: Week 4 MYLAB Exercises Score: 2.25 of 3 pts Louise Linguere 6/5/18 11:10 PM Save 6 of 18 (17 complete) Score: 90.63%, 36.25 of 40 pts S20-11 (similar to) Question Help Funtime Park competes with Fun World by providing a variety of rides. Funtime sells tickets at $130 per person as a one-day entrance fee. Variable costs are $13 per person, and fixed costs are S760,500 per month. Under these conditions, the breakeven point in tickets is 6,500 and the breakeven point in sales dollars is $845,000 Read the requirements. Requirement 1. Suppose Funtime Park cuts its ticket price from $130 to S52 to increase the number of tickets sold. Compute the new breakeven point in tickets and in sales dollars Begin by selecting the formula labels and then entering the amounts to compute the number of tickets Funtime must sell to break even under this scenario. (Abbreviation used: CM contribution margin. Complete all answer boxes. For items with a zero value, enter "0".) - Required sales in units Requirements 1. Suppose Funtime Park cuts its ticket price from S130 to $52 to increase the number of tickets sold. Compute the new breakeven point in tickets and in sales dollars. 2. Ignore the information in Requirement 1. Instead, assume that Funtime Park increases the variable cost from $13 to $52 per ticket. Compute the new breakeven point in tickets and in sales dollars. PrintDone Choose from any drop-down list and then click Check Answer. Clear All Check Answer remaining

Explanation / Answer

Break-even point Is the number of units when the company makes no-profit no-loss.

Formula to be used is:

Number of units required = (Fixed Cost + Operating Income)/CM

Amount of Sales = (Fixed Cost + Operating Income)/CM Ratio

Case 1:

Contribution Margin = Selling Price – Variable Cost

Contribution Margin ratio = Contribution Margin/Selling Price

For break even units, Operating income = 0.

Now, putting in the values that we have in question,

Contribution Margin = 52 – 13 = 39

Contribution Margin Ratio = 39/52 = 0.75

Break even units = 760,500/39 = 19,500 units. So, they need to sell 19,500 tickets at price of $52 to break-even.

Break-even sales = 760,500/0.75 = $1,014,000

Case 2:

Contribution Margin = 130 – 52 = 78

Contribution Margin Ratio = 78/130 = 0.60

Break even units = 760,500/78 = 9,750 units. So, they need to sell 9,750 tickets at price of $130 to break-even.

Break-even sales = 760,500/0.60 = $1,267,500

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