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QUESTION 2. Your events management company is planning a party and you have been asked to prepare a report for your manager. You have identified the following costs which you think are relevant; £ Venue hire 1,500 Staff costs 750 Promotional costs 150 Food and drink cost per person 15 The venue can hold up to 500 people and you think you can sell tickets for £36 each. Required (show your workings) Prepare your report addressing the following questions; a) How many tickets do you have to sell to breakeven? b) If you expect to sell 175 tickets, what is the margin of safety c) If your target profit is £500, how many tickets will you need to sell? d) How much profit/(loss) will you make if you sell 160 tickets?

QUESTION 2. Your events management company is planning a party and you have been asked to prepare a report for your manager. You have identified the following costs which you think are relevant; £ Venue hire 1,500 Staff costs 750 Promotional costs 150 Food and drink cost per person 15 The venue can hold up to 500 people and you think you can sell tickets for £36 each. Required (show your workings) Prepare your report addressing the following questions; a) How many tickets do you have to sell to breakeven? b) If you expect to sell 175 tickets, what is the margin of safety c) If your target profit is £500, how many tickets will you need to sell? d) How much profit/(loss) will you make if you sell 160 tickets?

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 57P: Identifying Fixed, Variable, Mixed, and Step Costs Consider each of the following independent...
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QUESTION 2.

Your events management company is planning a party and you have been asked to prepare a report for your manager. You have identified the following costs which you think are relevant;

 

 

£

Venue hire

1,500

Staff costs

750

Promotional costs

150

Food and drink cost per person

15

 

The venue can hold up to 500 people and you think you can sell tickets for £36 each.

 

Required (show your workings)

Prepare your report addressing the following questions;

a) How many tickets do you have to sell to breakeven?

b) If you expect to sell 175 tickets, what is the margin of safety

 

c) If your target profit is £500, how many tickets will you need to sell?

 

d) How much profit/(loss) will you make if you sell 160 tickets?

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