4-32. The fixed costs of running a fund-raising dinner for Meals for the Homeles

Question

4-32. The fixed costs of running a fund-raising dinner for Meals for the Homeless are $10,000 and the variable costs are $75 per attendee. The facility where the event is being held can accommodate 500 people. Answer the following questions about the event:

1. If Meals charged $275 per ticket, how many people would have to attend the gala for the organization to break even on the event? 2. If Meals charged $300 per ticket, the contribution margin from each ticket sold would be: __________. 3. If 500 people attend the event, how much does the organization have to charge each attendee to earn a profit of $100,000? (Assume costs from original problem are still in effect.)

Explanation / Answer

1

2.

225

3.

Fixed Cost 10000 Meal Charge 275 Less:Variable cost 75 Contribution Margin 200 Break even No. of People Fixed Cost/ Contribution Margin Per Unit 10000/200 50

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