Mike’s financial Services sells financial advice for people planning for a retir
ID: 3395199 • Letter: M
Question
Mike’s financial Services sells financial advice for people planning for a retirement. The company offers seminars on this topic. For a typical seminar, the room rental at a hotel is $1000 and the cost of advertising is about $10000 per seminar. The cost of materials and gifts is $60 per attendee. The company charges $250 per person to attend.
How many people must attend to break even?
The hotel room they have been renting (call this hotel room A) can only accommodate 40 people comfortably. They can instead rent another hotel room (call that hotel room B) for $3000, which can accommodate 60 people. Which hotel room should the company rent? (Hint: what are the profits if the company rents hotel room A vs hotel room B?)
Explanation / Answer
Mike’s financial Services sells financial advice for people planning for a retir