26) Atlanta Senior Center is planning its annual fundraiser. The event committee

Question

26) Atlanta Senior Center is planning its annual fundraiser. The event committee has developed the following budget for the event. Ballroom rental Entertainment Printing Food Decorations $3,000 $2,500 $600 plus $9 per person $30 per person $700 plus $5 per person Required: A) Determine the cost function. B) If Atlanta Senior Center charges $100 per person, and 1,000 people attend, how much profit will be derived by this event? Answer: A) Fixed cost $3,000+ $2,500 $600 +$700-s6,800 Variable cost $9+$30+ $5-$44 per person Y $6,800+$44X Where: Y Total cost of fundraiser X = Number of attendees B) ($100 x 1,000)- I$6,800 ($44 x 1,000)]-$49,200 Diff: 2 LO: 3-2 AACSB: Analytic skills Learning Outcome: Define and distinguish between variable, fixed and mixed costs 3.3 Questions

Explanation / Answer

Total Cost = Fixed Cost + Varable Cost Fixed Cost: This cost is the fixed irrespective of production level Variable Cost: This cost is totally dependentent on the number of people   So, Fixed Cost = $ 3,000 + $ 2,500 + $ 600 + $ 700 = $ 6,800 These four cost Baloon Cost is totally fixed cost so it will not change if the changes Is   in the number of guest Variable Cost of = $ 9 + $ 30 + $ 5 = $ 44 Per person In the variable cost like a Food expenss. It will incrre only if the person is came if the person will not came then there is no food expenses against that person. So the variable cost = Number of person X Variable cost Per units As per the above Total Cost = Fixed Cost + Variable Cost Per units X Number of Person So, Y is the total Cost and X = number of attendee 100 x 1000 IS The relevant for the answer B ; in this the number of attendee is 1000 people and   the charges per attendee is $ 100 so the toal revenue = $100 X 1000 Attendee = $ 100,000 Agaisnt this total revenue there is added of fixed cost and variable cost. Note: If any other clarification required then please comment

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