Respuesta :
Answer:
the Breakeven point for option one is lowest
Explanation:
Given:
Option One;
Fixed rental cost = $1,000
per person cost for food = $12
Option two;
Fixed rental cost = $3,000
per person cost for food = $8
administrative and marketing expenses = $1,800
Cost to hire band = $800
Price of ticket per person = $30
Now,
Total fixed cost under option One
= $1,000 + $1,800 + $800
= $3,600
and,
Total fixed cost under option two
= $3,000 + $1,800 + $800
= $5,600
also,
Contribution margin per ticket for option one
= $30 - $12
= $18
and,
Contribution margin per ticket for option two
= $30 - $8
= $22
Therefore,
Breakeven point for option one
=[tex]\frac{\textup{Fixed cost}}{\textup{contribution margin per person}}[/tex]
= [tex]\frac{\textup{3,600}}{\textup{18}}[/tex]
= 200 person
and,
Breakeven point for option two
=[tex]\frac{\textup{Fixed cost}}{\textup{contribution margin per person}}[/tex]
= [tex]\frac{\textup{5,600}}{\textup{22}}[/tex]
= 255 person
Hence, the Breakeven point for option one is lowest
