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Big Sports University is planning to hold a fundraising banquet at one of the local country...

Big Sports University is planning to hold a fundraising banquet at one of the local country clubs. It has two options for the banquet:

1. Foothills Country Club
a. Fixed rental cost of $600,
b. plus $15.00 per person for food.
2. Downhill Country Club
a. Fixed rental cost of $1,080.
b. It will have to hire a caterer who charges $12.00 per person for food.

Big Sports has budgeted $900 for administrative and marketing expenses. It plans to hire a band, which will cost another $400. Tickets are expected to be $40 per person. Any other items required for the event will be donated by its local business supporters.


What is the breakeven point in tickets sold of option one?

70 tickets

170 tickets

76 tickets

85 tickets

80 tickets
business   accounting   
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Answer #1

Option 1 :

Total fixed cost = Fixed rental cost + Administrative and marketing expenses + Cost of hiring band = $600 + $900 + $400 = $1900

Variable cost per person = $15

Tickets selling price per person = $40

Break even point = Total fixed cost / ( Selling price per person - Variable cost per person ) = $1900 / ( $40 - $15 ) = 76 tickets

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