The Student Senate is sponsoring the biggest Christmas dance in the University\'
ID: 1227861 • Letter: T
Question
The Student Senate is sponsoring the biggest Christmas dance in the University's history. A ticket allows a couple to enjoy a dinner for two. attend the dance, and receive a favor to remember the event by Tickets will be sold for couples only Although a not-for-profit function, it must breakeven Here are the costs involved: Assuming all 800 tickets are sold, what price per ticket must be charged to breakeven? What total revenue will sale of al 800 tickets at the price in (1) raise' What is the Contribution Margin Ratio (CMR) using the costs in (1)? The Senate decided to charge enough to give S1000 to chantey What price must be charged for the 800 tickets to raise $1000 above breakeven? If you are cautious, and believe only 500 tickets can be sold (but still want to give the $1000 to charity), what price should you charge per ticket (sorry - you sum have to pay the printer for all 800 tickets)? What is the Doll in (5) above (assume that $27 per ticket was charge$1000 was to be given to chantey, but that only 600 tickets were sold)?Explanation / Answer
1. Total cost = variable cost + fixed cost.
Adding up the fixed costs = 1000+400+65+150+35 = $1650.
Adding up variable costs = (2+16+2.08)*Q
Where Q = number of tickets sold per couple.
VC = 20.08*Q
TC = 1650 + 20.08*Q
A firm breaks even when it earns no profit and no loss.
That means total revenue = total cost.
Total revenue = price times quantity.
Given quantity Q = 800, so TC = 1650 + 20.08*800
TC = 17714
P * Q = TC
P * 800 = 17714
P = $22.1425
2. Total revenue = 22.1425 * 800
TR = $17714
3. CMR = contribution margin/price*100.
Contribution margin = price - unit variable Cost
= 22.1425 - 20.08
= $2.0625
CMR = 2.0625/22.1425*100
CMR = 9.314.
4. In order to raise charity $1000 would be added to the cost.
Now, P * Q = C + 1000.
P * 800 = 17714 + 1000
P = $23.3925
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