Golden Age Retirement Planners specializes in providing financial advice for peo

Question

Golden Age Retirement Planners specializes in providing financial advice for people planning for a comfortable retirement. The company offers seminars on the important topic of retirement planning. For a typical seminar, the room rental at a hotel is $1,000 and the cost of advertising and other incidentals is about $10,000 per seminar. The cost of the materials and special gifts for each attendee is $60 per person attending the seminar. The company charges $250 per person to attend the seminar as this seems to be competitive with other companies in the same business. How many people must attend each seminar for Golden Age to break-even?

Explanation / Answer

Contribution Margin Ratio= Sales Price- Variable Cost per unit

                                                 $250-$60=$190                                              

Break even point in $ =Fixed Cost/Contribution per unit

                                        =$1,000+$10,000/190

                                        =$11,000/190

                                          =57.89 i.e 58 people

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