LPL Financial advisors specialize in providing investment advice for people inte

Question

LPL Financial advisors specialize in providing investment advice for people interested in estate planning. The company offers seminars on the topic of long-term investment strategies. For a typical seminar, the room rental rate at a 4-star hotel is $1,565 and the cost of advertising and other miscellaneous materials is $12,500 per seminar. The cost of the materials is $78 per attendee. Each attendee also receives a special gift costing $43 per person. The company charges $425 per person to attend each seminar, a reasonably competitive amount as determined by LPL's market research. How many people must attend their seminar for LPL to break even?

Explanation / Answer

Breakeven point in Units = Fixed Cost / (Sales Price per unit – Variable Cost per unit)

Fixed Cost = Room Rental + Cost of Advertisement
=> $1,565 + $12,500 = $14,065

Variable Cost = Cost of material + Cost of gift
=> $78 + $43 = $121

Sales price = $425

Breakeven Point = $14,065 / ($425 - $121) = 46.27 or 47 units

So, for LPL to break even, 47 people must attend the seminar.

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