Question

Imagine that you are asked to consult with a drama club that puts on a play...

Imagine that you are asked to consult with a drama club that puts on a play every year. The club asks you: How much should we charge for tickets if we want to cover our costs? You begin by listing the club’s fixed and variable costs and then make a recommendation for a ticket price.

Give the club three examples of each type of cost.

Fixed Cost

1

2

3

Variable costs

1

2

3

Homework Answers

Answer #1

Example of Fixed cost for the drama club will be:

a) Costumes of the characters and artists,

b) Building where they stage the performance i.e. rent.

c) Property they use for performances. Like if they are showing a drama about Game of thrones they must have swords, a throne, and horses etc. All these things used in the performance are fixed.

Variable cost for a drama company will be:

a) salary or wages paid to the artists.

b) Bills of other utilities like make up.

c)   Insurance of the good and artists working.

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