Question

Millbridge Animal Protective Services (MAPS) is planning its spring awards dinner as a fundraising event. It is planning to charge each attendee $150. Feast Hall, the site of the dinner, will charge MAPS $5,000 for the use of its posh VIP Room and $50 per plate for food. The VIP Room has a capacity of 180 people. Rocky Mount and the Tar Heels (one band) will provide the entertainment for their standard performance fee of $1,000 per night.

A. How many people would need to attend in order for MAPS to break even?
B. If MAPS sells 100 tickets for the dinner, what is the average cost to MAPS for each person with a ticket?

Answer 1

A) break even point in units = total fixed costs / contribution margin

• total fixed costs = $5,000 + $1,000 = $6,000
• contribution margin = $150 - $50 = $100

break even point = $6,000 / $100 = 60 attendees

B) if MAPS sells 100 tickets, its total cost = $6,000 + (100 x $50) = $11,000

average total cost per ticket = $11,000 / 100 tickets = $110 per ticket