April Longmeadow loves living in Massachusetts because of all the history that the region offers and, in addition to operating her pizza business, she sits on the board of directors for a local nonprofit history museum. The museum charges a small admission fee to cover its operating expenses. The objective is to break even. A local benefactor recently pledged an annual donation of $25,000 to the museum.

In a recent strategy meeting, April suggested the museum raise the price of admission, so that the museum's "break-even point would be lower." The financial manager responded by agreeing they should raise the price and stated the company would be "less likely to incur a loss."

1. How will the donation affect the museum's break-even attendance level
2. What would happen to the break-even point if the admission price and unit variable costs increased by the same dollar amount?
3. Do you agree with April and/or the financial manager? Why?
4. Consider two museums with identical fixed expenses, unit variable costs, and profits. One company has a much lower admission price. Explain how this can happen.