Question

he 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)	$12
Favors and program (per person)	$7
Band	$900
Rental of ballroom	$2,200
Professional entertainment during intermission	$2,700
Tickets and advertising	$700

The committee members would like to charge $45 per person for the evening’s activities.

Required:
1.	Compute the break-even point for the dinner-dance (in terms of the number of persons who must attend).

        

2.	Assume that last year only 250 persons attended the dinner-dance. If the same number attend this year, what price per ticket must be charged in order to break even? (Round your answer to 2 decimal places.)

     

Answer 1

Solution:
1.	Break-even point	250	persons
Working Notes:
	Price per ticket		$45
	Less: Variable expenses
	Dinner	$12
	Favors and program	$7
			$19
	Contribution margin per person		$26
	Total fixed expenses = Band + Rental of ballroom + Professional entertainment during intermission + Tickets and advertising
	Total fixed expenses = $900 + $2,200 + $2,700 + $700
	Total fixed expenses = $6500
	Break-even point = Total fixed expenses / Contribution margin per person
	Break-even point = $6500 /$26
	Break-even point = 250 Persons
2.	Ticket price per person to break even	45.00
Working Notes:
	Variable cost per person	$19
	[$12 + $ 7]
	Fixed cost per person	$26
	[total fixed expenses $6,500 /250 persons = $ 26]
	Ticket price per person to break even	$45
Notes:	In above calculation in 1. above break even point is 250 persons, so for 2nd $45 the current ticket price will be break even price at 250 persons.
	Break even price is the price at which , both fixed and variable expenses cost is recovered at that price.
Please feel free to ask if anything about above solution in comment section of the question.