Required information
Exercise 5-16 Break-Even Analysis and CVP Graphing [LO5-2, LO5-4, LO5-5]
[The following information applies to the questions displayed below.]
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.
Exercise 5-16 Part 1
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?
Required information
Exercise 5-16 Break-Even Analysis and CVP Graphing [LO5-2, LO5-4, LO5-5]
[The following information applies to the questions displayed below.]
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) | $ | 18 |
| Favors and program (per person) | $ | 2 |
| Band | $ | 2,800 |
| Rental of ballroom | $ | 900 |
| Professional entertainment during intermission | $ | 1,000 |
| Tickets and advertising | $ | 1,300 |
The committee members would like to charge $35 per person for the evening’s activities.
Exercise 5-16 Part 2
3. Refer to the original data ($35 ticket price per person). Prepare a CVP graph for the dinner-dance from zero tickets up to 600 tickets sold. (Use the line tool to draw three single lines (Total Sales Revenue, Fixed Expenses, Total Expenses). Each line should only contain the two endpoints. For the CVP Graph to grade correctly, you must enter the exact coordinates of each endpoint. Once all points have been plotted, click on the line (not individual points) and a tool icon will pop up. You can use this to enter exact co-ordinates for your points as needed. To remove a line/point from the graph, click on the line/point and select delete option.)
1) Contribution Margin Per person = Sales Price - Variable expenses
= $36 - ($13+$3) = $36 - $16 = $20 per person
Fixed Cost = Band+Rental of ballroom+Professional entertainment during intermission+Tickets and Advertising
= $1,000+$600+$400+$2,000 = $4,000
Break Even Point = Fixed Cost/Contribution Margin per person
= $4,000/$20 per person = 200 persons
2) Fixed Cost per person attended = $4,000/100 persons = $40 per person
Variable Cost per person = $13+$3 = $16 per person
Ticket Price per person to break even = Fixed Cost+Variable Cost
= $40+$16 = $56 per person
Therefore price of $56 per person is required to break even if only 100 persons attended the dinner-dance.
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