Question

The Hartford Symphony Guild is planning its annual dinner-dance. The dinner-dance committee has assembled the following expected costs for the event:

Dinner (per person)	$	13
Favors and program (per person)	$	3
Band	$	1,000
Rental of ballroom	$	600
Professional entertainment during intermission	$	400
Tickets and advertising	$	2,000

The committee members would like to charge $36 per person for the evening’s activities.

Required:

1. What is the break-even point for the dinner-dance (in terms of the number of persons who must attend)?

2. Assume that last year only 100 persons attended the dinner-dance. If the same number attend this year, what price per ticket must be charged in order to break even?

Answer 1

1.Break even point = Fixed cost/contribution margin per unit

                        = 4000/(36-16)

Break even point = 200 person

2. Profit= sales-variable cost-fixed cost

    0      = (100*X)-(100*16)-4000

     0      = 100X-5600

-100X     = -5600

100X      = 5600

X       = 56

Sale price = 56

so 56 per ticket must be charged in order to break even