Question

Funday Park competes with Cool World by providing a variety of rides. Funday sells tickets at $70 per person as a one-day entrance fee. Variable costs are $42 per person, and fixed costs are $170,800 per month.

Requried:
Compute the contribution margin per unit and the number of tickets Funday Park must sell to break even.

Answer 1

Break-even point in units= 6,100 tickets

Contribution margin= $28

Step-by-step explanation:

Giving the following information:

Funday sells tickets at $70 per person as a one-day entrance fee. Variable costs are $42 per person, and fixed costs are $170,800 per month.

To calculate the contribution margin we need to deduct the unitary variable cost from the selling price.

Contribution margin= 70 - 42= $28

To calculate the break-even point in tickets, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 170,800/28

Break-even point in units= 6,100 tickets