Question

(Convention planning) A professional organization plans its annual convention to be held in San Francisco. Arrangements are being made with a large hotel where the convention will take place. Participants in the 3-day convention will be charged a one-time fee of $ 500 per person, which includes registration fee, room, all food and tips. The hotel charges $ 20,000 to the organization for the use of facilities such as boardrooms, dance hall and facilities recreational. Additionally, the hotel charges $ 295 per person per room, food, and tips. The organization professional appropriates $ 125 of the $ 500 fee as annual fees to be deposited in the treasury of the national office. Determine the number of participants required for the organization to get back the fixed cost of $ 20,000.

Answer 1

Answer: 250 participants

Explanation:

Number of participants required to get back the fixed cost is also called the breakeven point can it can be calculated as follows:

= Fixed cost/ Contribution Margin

Contribution margin = Revenue - variable costs

= Revenue - charges for food and tips - appropriation for annual fees

= 500 - 295 - 125

= $80

Number of participants required:

= Fixed cost/ Contribution margin

= 20,000/80

= 250 participants