Question

1) You are serving as the chair for your community’s annual wellness campaign. A key event is the annual Walk 3k, Run 10k, Ride 20k event. The event is staged entirely by volunteers and the goal is to attract community-wide awareness of getting active as a key step to wellness. In other words, the goal is not to raise money, but to prompt awareness. As the chair, you set a financial goal to breakeven on the one and the only cost of the event, a fitness bag with the community seal and the event moto, “I AM ON THE RIGHT TRACK! The cost of the bags, which must be ordered in batches of 100, are a) Complete the table. b) You will charge an entry fee of $15 per participant. Determine the breakeven quantity of bags you must order. Remember orders must be in blocks of 100.

The cost of the bags, which must be ordered in batches of 100, are:

Bags	Fixed Cost	Variable Cost	Total Cost	Marginal Cost
0	1700	0
100	1700	500
200	1700	1200
300	1700	2700
400	1700	5200
500	1700	9000
600	1700	15000
700	1700	23800
800	1700	36800
900	1700	55800
1000	1700	83000

1. Complete the table.
2. You will charge an entry fee of $15 per participant. Determine the breakeven quantity of bags you must order. Remember orders must be in blocks of 100.

Answer 1

1. The table:

2. If $15 is charged, breakeven quantity = 300

reason: The table with total revenue and profit is as under:

  

To breakeven, profit maximizing rule can be applied where MR ≥ MC. That is 15. So, 300 bags must be ordered.
When 300 bags are ordered, TC = 4400; TR = 4500; profit = 100 (barely a profit). The next lot (400 bags) will lead to a loss of $900. So,300 bags must be ordered.