Topeka homeless shelter ( THS) has an annual fund-raising dinner. The fixed cost

Question

Topeka homeless shelter ( THS) has an annual fund-raising dinner. The fixed costs of the dinner are $10,000 and variable cost are $75 per attendee. The facility where the event is held can accommodate 500 people.

Q1. If THS sells out the place, what would the profit be from the dinner ? Topeka homeless shelter ( THS) has an annual fund-raising dinner. The fixed costs of the dinner are $10,000 and variable cost are $75 per attendee. The facility where the event is held can accommodate 500 people.

Q1. If THS sells out the place, what would the profit be from the dinner ?
Q1. If THS sells out the place, what would the profit be from the dinner ?

Explanation / Answer

The Total cost would be - Fixed Cost + Variable Cost

i.e. $ 10000 + (75*500) [Assuming full occupancy)

i.e. $ 47,500.

So, in order to calculate the profit, we need to calculate the total revenue and reduce the same by $ 47,500 in order to ascertain the profits.

In the given question, the Sales price of the place is not given, however, we can calculate the cost for dinner at the place as per the method given above.

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