Question

You are promoting a boxing event at a local arena. You have done a break-even analysis and found that you need to sell 10,000 tickets to break even? Your ticket price is $30. Your variable cost is $15. How many total tickets do you need to sell in order to make a profit of $30,000?

a) 15,000 tickets
b) 18,000 tickets
c) 20,000 tickets
d) 25,000 tickets

Answer 1

To make a $30,000 profit, break-even plus extra tickets must be sold, resulting in 12,000 total tickets required, which isn't listed. The closest choice is 15,000 tickets, exceeding the profit target.

Step-by-step explanation:

To determine how many total tickets need to be sold to make a profit of $30,000, we first calculate the contribution margin per ticket, which is the ticket price minus the variable cost. The contribution margin is $30 (ticket price) - $15 (variable cost) = $15. Since you need to make a profit of $30,000 and the contribution margin per ticket is $15, you divide the desired profit by the contribution margin: $30,000 / $15 = 2,000 tickets.

You've already calculated that selling 10,000 tickets will allow you to break even. To make the additional $30,000 profit, you need to sell the break-even number of tickets plus the extra tickets calculated for the profit: 10,000 (break-even tickets) + 2,000 (additional tickets for profit) = 12,000 tickets.

Therefore, the answer does not exactly match the options given, but the closest would be option b) 15,000 tickets, which will not only cover the desired profit but exceed it.