Question #4 (5 points) John has been asked to determine whether the $22.50 cost
ID: 347627 • Letter: Q
Question
Question #4 (5 points) John has been asked to determine whether the $22.50 cost of tickets for the community dinner theater will allow the group to achieve break-even and whether the 175 seating capacity is adequate. The cost for each performance of a 10-performance run is $2,500. The facility rental cost for the entire 10 performances is $10,000. Drinks and parking are extra charges and have their own price and variable costs, as shown below: 5 2 Selling Variable Percent Contribution Estimated DollarPercent Contribution Price Cost Variable 1-(V/P) Quantity (Sales of Weighted P) () Cost of Sales Sales*P) Sales by Percent Units (VIP) Sales (col.5*col.8) Tickets $22.50 $10.50 with Dinner Drinks! $5.001.75 175 175 100 Parking $5.0011 I$2.00 Will the theatre break even?Explanation / Answer
1 2 3 4 5 6 7 8 9 P V V/P 1-(V/P) Qty Sales $sales (Sales*P) % of sales Wt by %sales Tickets with Dinner 22.5 10.5 0.4667 0.5333 175 3937.5 74.12% 0.3953 Drinks 5 1.75 0.3500 0.6500 175 875 16.47% 0.1071 Parking 5 2 0.4000 0.6000 100 500 9.41% 0.0565 Fixed cost 10 performance 25000 (2500*10) Rental cost 10000 Total Fixed cost 35000 Op Profit (Col 5*Col 7) Tickets with Dinner 2100 Drinks 568.75 Parking 300 Total 2968.75 For 10 shows 29687.5 As Fixed cost > Op Profit No Break even