Question

The College of Business and Economics is planning to hold a fundraising banquet at Los Coyotes Country Club. The rental cost is $1,000 and food cost is $12 per person. The college has also budgeted $2,600 for administrative and marketing expenses for the event. Tickets are expected to be $30 per person.

What is the contribution margin per person?

Group of answer choices

$12

$42

$18

$30

Question 141 pts

How many tickets must be sold if the university wants to raise $3,600 after all expenses?

Group of answer choices

500

200

100

400

Question 151 pts

What is the degree of operating leverage if 300 people attend?

Group of answer choices

2.5

3

2

1.5

Answer 1

1) Contribution Margin Per Person = Service Revenue - Variable cost per Person

= 30 -12 = $18 Per Person

2) Tickets Must sell to earn the 3,600 Profit

= ( Fixed cost + Profit )/ CM per Person

Fixed Cost = 1000+2600 = 3,600

= (3,600+3,600) / 18 = 400 Tickets

3) Oeprating Leverage if 300 Tickets are Sold

operating Leverage = Contibution Margin / operating income

Contribution Margin = 18*300 = 5,400

opertaing income = 5,400-3,600 =1,800

Degree of operating leverage = 5,400/ 1800 = 3 Times

answers :

1) $18

2) 400

3) 3