Answer the following questions using the information below:

Southwestern College is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet:

Southwestern College has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band which will cost another $800. Tickets are expected to be $30 per person. Local business supporters will donate any other items required for the event.

-Which option provides the greatest operating income if 600 people attend?
A) Option one
B) Option two
C) Operating incomes are identical.
D) Both the options have 0 operating income as they are operating at breakeven point.

Question

Answer the following questions using the information below:

Southwestern College is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet:

Southwestern College has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band which will cost another $800. Tickets are expected to be $30 per person. Local business supporters will donate any other items required for the event.

-Which option provides the greatest operating income if 600 people attend?
A) Option one 
B) Option two 
C) Operating incomes are identical. 
D) Both the options have 0 operating income as they are operating at breakeven point.

Quizplus · Accepted Answer

Option two provides the greatest operating income if 600 people attend, which is $9,000 ($15 x 600 - $6,000). Option one would provide an operating income of $6,000 ($10 x 600 - $4,200).

Answer the Following Questions Using the Information Below