Question

Super Community Service runs Saturday afternoon movies for children, charging 50 cents admission per child. The fixed costs are $100 per Saturday for film rental, set up, and clean up. The Super Community Service also sells candy, drinks, and popcorn with a variable cost ratio of .50. The average Adult spends $2.00 on candy, drinks, and popcorn.

For each Saturday, what is the breakeven number of Adult attendees? How many Adults must attend if the Super Community Service wants an EBIT of $200?

Answer 1

.5x Assume 1 adult attend per child Let the no. of adults/children be X sales from children admission Sales from adult admission 2x Total sales 2.5x Fixed costs 100 Variable costs = .5 of Total Sales = 1.25x EBIT 2.5x-100-1.25x Hence, 2.5x-100-1.25x>200 1.25x>100 x>80 Hence, 80 adults should atlest attend