Answer the following questions using the information below: Southwestern College

Question

Answer the following questions using the information below: Southwestern College is planning to hold a fundraising banquet at one of the local country clubs. It has two options for the banquet OPTION 1: Crestvierw Country Club a. Fixed rental cost of $1,000 b. S12 per person for food OPTION 2: Tallgrass Country Club a. Fixed rental cost of $3,000 b. A caterer who charges $8.00 per person for food Southwestern College has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band which will cost another $800. Tickets are expected to be $30 per person. Local business supporters ill donate any other items required for the event. 11) Which option provides the greatest operating income if 600 people attend? A) Option one C) Operating incomes are identical. B) Option two D) Operating income is indeterminable.

Explanation / Answer

Select - Option - B

In computing the sale ....... 600 people were multiplied with 30 per person = 18000. This is same for any option.

Variable cost ...... Food cost charged per person = 600 * 12 for option - 1 and 600 * 8 for option - 2

      Option - 1     Option - 2 Sales 18000 18000 (-) Variable cost 7200 4800 Contribution 10800 13200 (-) Fixed cost Rent 1000 3000 Bus 800 800 Admin and marketing 1800 3600 1800 5600 Profit 7200 7600

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.