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LaComedia Dinner Theater sells tickets for dinner and a show for $40 each. The cost of providing dinner is $26 per ticket and the fixed cost of operating the theater is $100,000 per month. The company can accommodate 12,000 patrons each month. What is the projected monthly income if 10,000 patrons visit the theater each month?

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Answer:

The projected monthly income under those conditions would be $40.000

Step-by-step explanation:

Total Income equals total revenue minus total cost

I = R - C

Total cost, equals fixed costs plus variable costs

Total Cost = Fixed costs + Variable costs

10.000 people paid for a ticked $40 each, therefore total revenue is:

10.000 x $40 = $400.000

The variable costs are $26 per dinner, and 10.000 dinners were sold:

10.000 x $26 = $260.000

Finally, the fixed cost for operating the theater is $100.000. This cost does not depend on the amount of tickets sold. You might sell 0 tickers, and still have to pay the $100.000.

Total Income therefore is = $400.000 - $260.000 - $100.000

= $40.000

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