Question

Evans Park

Evans Park is a small amusement park that provides a variety of rides for children and teens.   In a typical summer season, the park sells twice as many child tickets as adult tickets.   Adult ticket prices are $18 and the children’s price is $10.   Revenue from food and beverage concessions is estimated to be $60,000, and souvenir revenue is expected to be $25,000.   Variable costs per person (child or adult) are $3.25.   Fixed costs amount to $150,000.   Build a model to show the profitability of this park based on these facts.  

REQUIRED: Show the model with adult sales at the break-even point.

HINT: The EvansPark sheet gives a starting point.   After entering labels and formulas for your model, use Goal Seeking to find where to adjust adult ticket sales so that profit equals zero.   “Goal Seek” is found under the “What-If Analysis” button of the “Data” ribbon.

Answer 1

	Determination of selling price per composite untis
		Quanity	Selling price per unit		Total composite unit
	Adult	1	18		18
	Child	2	10		20
				Total	38
	Determination of variable costs per composite unit
		Quanity	Variable cost per unit		Total composite unit
	Adult	1	3.25		3.25
	Child	2	3.25		6.5
				Total	9.75
	Contribution margin per composite unit
		Selling price per composite units			38
	Less	Variable cost per composite units			9.75
		Contribution margin per composite unit				28.25
	Determination of break even points for composite units
		=Fixe cost/Contribution margin per composite unit
		=(150000-85000*)/28.25			=	2300.885
		* Revenue from food & beverages & souvenir
	Determination of No. of units of each product sold at break even point
		Quanity	No. of composite unit		Unit sales at break even
	Adult	1	2300.885		2300.88496
	Child	2	2300.885		4601.76991
				Total	6902.65487