Question

1. As a manager of the Fairmont State Theatre Company you have decided that concession sales will support the organization. The following table provides the information for the concession sales.

Item	Selling Price	Variable Cost	% of Revenue
Soft drink	$1.25	$.65	25
Wine	4.75	.85	30
Coffee	1.250	.30	30
Candy	2.00	.30	15

Last year’s manager advised you to add 10% of variable cost as a waste allowance for all categories. You estimate labor cost to be $450.00(5 booths with 2 people each). If nothing is sold, your labor cost will be $450.00, so you decide to consider this a fixed cost. Booth rental with is a contractual cost is $100 for each booth per night.

1. What is the breakeven volume per evening performance?

2. How much wine would you expect to sell each evening at the breakeven point?

Note: Round to two decimal points within your table.

Answer 1

Solution(s):