Use the following data to answer the next 3 questions. The Glorious hotel generally charges conference organisers $65 per delegate attending a one day conference. It also incurs $10 in variable costs per delegate. Over the last few years it has averaged 80 delegates for each conference sold. Last year the hotel incurred $88,000 of fixed costs and allocated $2,000 to each of the 44 conferences that it hosted.
-If conferences sold by the Glorious hotel in the current year are expected to attract an average of 80 delegates, how many conferences must the hotel host in the year in order to breakeven?

Question

Quizplus · Accepted Answer

To breakeven, the total revenue must equal the total cost. 
Total revenue per conference = 80 x $65 = $5,200 
Total variable cost per conference = 80 x $10 = $800 
Total cost per conference = $88,000/44 + $800 = $2,000 + $800 = $2,800 
To breakeven, the hotel needs to host conferences with a total revenue of $88,000, which is:
$88,000 ÷ $5,200 = 16.92 or approximately 17 conferences. 
However, since the hotel cannot host a fraction of a conference, the answer is 20 conferences to cover the fixed costs and variable costs for each conference.

Use the Following Data to Answer the Next 3 Questions