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Marat540 [252]
3 years ago
11

Southwestern College is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the​ b

anquet: OPTION​ one: Crestview Country Club a. Fixed rental cost of​ $1,000 b.​ $12 per person for food OPTION​ two: Tallgrass Country Club a. Fixed rental cost of​ $3,000 b.​ $8.00 per person for food Southwestern College has budgeted​ $1,800 for administrative and marketing expenses. It plans to hire a band which will cost another​ $800. Tickets are expected to be​ $30 per person. Local business supporters will donate any other items required for the event. Which option has the lowest breakeven​ point?
Business
1 answer:
xenn [34]3 years ago
7 0

Answer:

the Breakeven point for option one is lowest

Explanation:

Given:

Option One;

Fixed rental cost = $1,000

per person cost for food = $12

Option two;

Fixed rental cost = $3,000

per person cost for food = $8

administrative and marketing expenses = $1,800

Cost to hire band = $800

Price of ticket per person = $30

Now,

Total fixed cost under option One

= $1,000 + $1,800 + $800

= $3,600

and,

Total fixed cost under option two

= $3,000 + $1,800 + $800

= $5,600

also,

Contribution margin per ticket for option one

= $30 - $12

= $18

and,

Contribution margin per ticket for option two

= $30 - $8

= $22

Therefore,

Breakeven point for option one

=\frac{\textup{Fixed cost}}{\textup{contribution margin per person}}

= \frac{\textup{3,600}}{\textup{18}}

= 200 person

and,

Breakeven point for option two

=\frac{\textup{Fixed cost}}{\textup{contribution margin per person}}

= \frac{\textup{5,600}}{\textup{22}}

= 255 person

Hence, the Breakeven point for option one is lowest

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Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when
swat32

Answer:

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that the average total cost when 5 units of output are produced is $60, and the marginal cost of the sixth unit of output is $120. What is the average total cost when six units are produced

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Answer:

June 30                   Dr.            Cr.

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Salary Payable                     $14,800

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Answer:

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