Question

Basic equations: Ol= (P-VC) Q-FC NI = 01 (1-t) R=(P) (0) The Toledo Mud Hens baseball team plays 70 home games a season. (We will ignore pre-season and playoffs for simplicity.) Their stadium has a capacity of about 10,000. Assume that the average ticket price is $15, variable costs are $1., and fixed costs are $6,000,000, which is mostly salaries of players and staff. The tax rate is 25%. What is their break even for the year, in terms of both number of tickets and revenue If they want net income of $1,000,000, what is their: Operating income Number of tickets I

Answer 1

1.

Ticket price(A)	$15
variable Cost(B)	$1
contribution(C)=(A)-(B)	$14
Fixed Cost	$6,000,000

Break even number=Fixed Cost/Contribution per Unit

=$6,000,000/$14

=428571 Units

Revenue=Quantity* Price

=428,571*15=$6,428,565

2.

If Net Income=1,000,000

• Operating Income=Net Income/(1-T)

=1,000,000/(1-0.25)

=$1,333,333.33

• Number of ticket:-

Operating Income=(price-Variable Cost)Quantity-FC

1333333.33=($15-$1)Quantity-6,000,000

Quantity=(1,333,333.33+6,000,000)/$14

=138095

"Please Rate if it helps you or let me know if anything else."