Question

The Hartford Symphony Guild is planning its annual dinner-dance. The dinner-dance committee has assembled the following expected costs for the event: Dinner (per person) $14 Favors and program (per person) $7 Band $1,800 Rental of ballroom $1,100 Professional entertainment during intermission $2,000 Tickets and advertising $700 The committee members would like to charge $49 per person for the evening’s activities. Required: 1. Compute the break-even point for the dinner-dance (in terms of the number of persons who must attend).

Answer 1

Answer:

$200 persons

Explanation:

Total variable cost per person:

= Dinner (per person) + Favors and program (per person)

= $14 + $7

= $21

Total fixed cost:

= Band + Rental of ballroom + professional entertainment during intermission + Tickets and advertising

= $1,800 + $1,100 + $2,000 + $700

= $5,600

Price = $49

Contribution = Price - Total variable cost per person

                    = $49 - $21

                    = $28

1. Break-even point for the dinner-dance:

= Total fixed cost ÷ Contribution margin per unit

= $5,600 ÷ $28

= $200 persons