Exercise 3-25 Basic Decision Analysis Using CVP (LO 3-1)
Anu’s Amusement Center has collected the following data for operations for the year:
Total revenues | $ | 2,244,000 |
Total fixed costs | $ | 777,600 |
Total variable costs | $ | 1,156,000 |
Total tickets sold | 68,000 | |
Required:
a. What is the average selling price for a ticket?
b. What is the average variable cost per ticket?
c. What is the average contribution margin per ticket? (Do not round intermediate calculations.)
d. What is the break-even point? (Do not round intermediate calculations.)
e. Anu has decided that unless the operation can earn at least $350,400 in operating profits, she will close it down. What number of tickets must be sold for Anu’s Amusements to make a $350,400 operating profit for the year on ticket sales? (Do not round intermediate calculations.)
What are the number of tickets?
Ans.a | Average selling price = Total revenues / Total tickets sold | |||
2244000 / 68000 | ||||
$33.00 | per ticket | |||
Ans.b | Average variable cost per ticket = Total variable costs / Total tickets sold | |||
1156000 / 68000 | ||||
$17.00 | per ticket | |||
Ans.c | Average contribution margin = Average selling price - Average variable cost per ticket | |||
$33 - $17 | ||||
$16.00 | per ticket | |||
Ans.d | Break even point = Fixed cost / contribution margin per unit | |||
777600 / $16 | ||||
48600 | tickets | |||
Ans.e | Number of tickets = (Fixed cost + desired Profit) / Contribution margin per ticket | |||
(777600 + 350400) / 16 | ||||
1128000 / 16 | ||||
70500 tickets | ||||
Exercise 3-25 Basic Decision Analysis Using CVP (LO 3-1) Anu’s Amusement Center has collected the following...
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