Concordia College is planning a concert.  Maximum capacity for the concert venue is 3,000.  tickets will be sold for $25 per ticket.  The college estimates that costs of producing the concert to be 2,500 plus the cost of the band.   Alternative A a fee of $8,000 and $5 per tickets; or Alternative B - $8.00 per ticket sold at what tickets sales level will the two proposal provide the same profite of loss result? 2.What is the breakeven point in terms of tickets sold for Alternative A  3. What is the breakeven point in terms of tickets sold for Alternative B (Use the Equation Method)?  4.  If you expect to see 3,000 tickets, which alternative produces the highest profit?

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Asked Dec 5, 2019
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Concordia College is planning a concert.  Maximum capacity for the concert venue is 3,000.  tickets will be sold for $25 per ticket.  The college estimates that costs of producing the concert to be 2,500 plus the cost of the band.  

 

Alternative A a fee of $8,000 and $5 per tickets; or 

Alternative B - $8.00 per ticket sold

 

at what tickets sales level will the two proposal provide the same profite of loss result?

 

2.What is the breakeven point in terms of tickets sold for Alternative A

 

 

3. What is the breakeven point in terms of tickets sold for Alternative B (Use the Equation Method)?

 

 

4.  If you expect to see 3,000 tickets, which alternative produces the highest profit?

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The profit on the sale of tickets is Total contribution on the tickets less the fixed costs. We have assumed that the tocket volume is X. So, the Profit as per Alternative A= 20X-10500 & Profit as per alternative B =17X-2500

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1 Alternative A Sale price of the ticket (a) 25 Less. Variable cost of the ticket (b) 5 Contribution per ticket (a-b) 20 Number of tickets х Fixed Cost(2500+8000) 10500 Alternative B Sale price of the ticket (a) 25 Less. Variable cost of the ticket (b) Contribution per ticket (a-b) 17 Number of tickets Fixed Cost(2500) 2500 20X-10500=17X-2500 3X=10500-2500 or, Or, 3X=8000 Ог, 3X=2667

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2. Break even point is the level of sales where the sales is just able to cover the fixed costs. Breakeven point is compu...

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Fixed Cost(2500+8000) (a) Contribution per unit (25-5) (b) So, breakeven point (a/b) 10500 20 525

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