You\'re managing a dinner theater and want to determine of the ticket price of $

Question

You're managing a dinner theater and want to determine of the ticket price of $22.50 for dinner and the performance sill allow your organization to break even and whether the 175 seating capacity is adequate. You're planning a 10 performance run and your cost per performance is $2,500. The rental cost for all 10 performances is a total of $10,000. Drinks and Parking are extra charges and have their own price and variable cost as shown below: (the information below is based on one performance) al 10 performances is a total of Estimated Sales Quantity in Units Tickets with Dinner Drinks Parking Selling Price $22.50 $5 $5 Variable Cost $10.50 $1.75 $2.00 175 175 100 Based on the information presented above and considering all 10 perfomances, will your organization break even and how much profit/loss will they experience

Explanation / Answer

Total Cost:

Performance cost = Per performance cost*Total performance = 2500*10 = 25000

Rental cost = 10000

Ticket with Dinner = Variable cost*Sales quantity*Total performance = 10.5*175*10 = 18375

Drinks = Variable cost*Sales quantity*Total performance = 1.75*175*10 = 3062.5

Parking = Variable cost*Sales quantity*Total performance = 2*100*10 = 2000

Total = 25000+10000+18375+3062.5+2000 = 58437.5

Total Revenue:

Ticket with Dinner = Price*Sales quantity*Total performance = 22.5*175*10 = 39375

Drinks = Price*Sales quantity*Total performance = 5*175*10 = 8750

Parking = Price*Sales quantity*Total performance = 5*100*10 = 5000

Revenue = 39375+8750+5000 = 53125

So, Net gain/loss = Revenue - Cost = 53125-58437.5 = -5312.5

Thus, it is in loss

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