As a community service, the local YWCA runs Saturday afternoon movies for children, charging 50 cents admission per child. The fixed costs are $100 per weekend for film rental and cleanup. The YWCA also sells candy, drinks, and popcorn with a variable cost ratio (variable costs divided by selling price)of 0.50. The average child buys $2.00 of junk food. What is the breakeven number of children?
A)47 children
B)52.3 children
C)66.7 children
D)73.5 children

Question

Quizplus · Accepted Answer

The formula for calculating the breakeven number of units is:
Breakeven Quantity = Fixed Costs / (Price per Unit - Variable Costs per Unit)

Price per unit = admission fee + average spending on junk food = $0.50 + $2.00 = $2.50
Variable Costs per unit = $2.00 x 0.5 = $1.00
Fixed Costs = $100

Breakeven Quantity = $100 / ($2.50 - $1.00) = 66.7 children

Therefore, the breakeven number of children is 66.7, rounded up to 67. The best choice is C, with a breakeven number of 66.7 children.

As a Community Service, the Local YWCA Runs Saturday Afternoon