Use the information below to answer the following question(s).
Big Sports University is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet:
1. Foothills Country Club
a. Fixed rental cost of $600
b. plus $15.00 per person for food.
2. Downhill Country Club
a. Fixed rental cost of $1,080
b. It will have to hire a caterer who charges $12.00 per person for food.
Big Sports has budgeted $900 for administrative and marketing expenses. It plans to hire a band, which will cost another $400. Tickets are expected to be $40 per person. Any other items required for the event will be donated by its local business supporters.
-What is the break-even point in tickets sold of option one?

Question

Quizplus · Accepted Answer

To find the break-even point, we need to find the number of tickets required to cover the total cost of the event. 
For Option 1: 
Total Cost = Fixed rental cost + (Cost per person x number of tickets sold) + Administrative and Marketing Expenses + Band cost 
Total Cost = 600 + (15x) + 900 + 400 
Total Cost = 1015x + 1900

For the break-even point, the total cost = total revenue 
Total Revenue = Ticket Price x Number of Tickets Sold 
1015x + 1900 = 40x 
975x = 1900 
x ≈ 1.95

Since we cannot sell fractional tickets, we need to round up to the nearest whole number. 
Therefore, the break-even point for Option 1 is 2 tickets.

For Option 2: 
Total Cost = Fixed rental cost + Cost per person (including catering) x number of tickets sold + Administrative and Marketing Expenses + Band cost 
Total Cost = 1080 + (12x) + 900 + 400 
Total Cost = 12x + 2380

For the break-even point, the total cost = total revenue 
Total Revenue = Ticket Price x Number of Tickets Sold 
12x + 2380 = 40x 
28x = 2380 
x = 85

Therefore, the break-even point for Option 2 is 85 tickets.

Option 1 is the best choice because it has a lower break-even point and lower overall cost.

Use the Information Below to Answer the Following Question(s)