Kim is thinking of organizing a fundraiser to support a local charity. She has p
ID: 2569511 • Letter: K
Question
Kim is thinking of organizing a fundraiser to support a local charity. She has planned to rent a banquet hall and provide the guests with food, entertainment, and various party favors. She has decided to charge $500 a person. After researching around town, Kim has discovered the following costs:
Fixed CostsRental fee of banquet hall
$150,000
Advertising
50,000
Entertainment
4,000
Variable CostsPer GuestFood
$12
Other miscellaneous costs
8
How many guests must attend in order for Kim to break even?
A. 408
B. 417
C. 425
D. 443
Explanation / Answer
Break even = total fixed cost/contribution per unit contribution per unit revenue 500 less variable cost per unti guest food -12 other miscellaneous expense -8 contribution per unit 480 total fixed expense rental fee of banquet hall 150,000 Adveritsing 50,000 entertainment 4,000 total fixed expense 204,000 BEP = 204,000/480 425 option C is the answer
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