4. value: 20.00 points The Hartford Symphony Guild is planning its annual dinner

Question

4. value: 20.00 points The Hartford Symphony Guild is planning its annual dinner-dance. The dinner-dance committee has assembled the following expected costs for the event: Dinner (per person) Favors and program (per person) Band Rental of ballroom Professional entertainment during intermission Tickets and advertising $15 $7 $1,500 $1,500 $2.100 $700 The commitee members would like to charge $51 per person for the evening's activities. Required: 1. Compute the break-even point for the dinner-dance (in terms of the number of persons who mus attend) persons 2. Assume that last year only 250 persons attended the dinner-dance. I the same number attend this year, what price per ticket must be charged in order to break even? (Round your answer to 2 decimal places.) price per person to break even

Explanation / Answer

Income statement under Contribution margin method Selling Price 51 Less: Varible cost        Dinner 15        Favour and Program 7 Contribution margin per person 29 Less: Fixed Cost Band 1500 Rental of Balroom 1500 Professional entertainment 2100 Tickets and advertising 700 Total Fixed cost 5800 px = vx + FC + Profit Where, p is the price per unit, x is the number of units, v is variable cost per unit and FC is total fixed cost. Calculation BEP in Sales Units At break-even point the profit is zero therefore the CVP formula is simplified to: px = vx + FC Solving the above equation for x which equals break-even point in sales units, we get: Break-even tickets to be sold = x = FC p v = 5800/29 = 200 Persons Part-2   If 250 Persons attended then Break even price Total Fixed Cost 5800 Add: Variable Cost (250*22) 5500 Total Cost                           (a) 11300 No of Persons                  (b) 250 New Selling Price (a) / (b) 45.2

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