Break Even Point (Quantity) = Fixed Cost/(Unit Price Unit Variable Cost)

Profit Equation = Total Revenue Total Cost = (Unit Price x Quantity Sold) (Fixed Cost + Variable Cost)

Top Shelf Events is an events management company. They have a new client of motivational speakers called Up and Away who are putting on an event at the Sydney Entertainment Centre (SEC) on January 31st. There is a flat sell price of $95 per ticket with a capacity of 10,000 people.

The hire cost of the venue is $150,000 which includes all lighting and production costs. Staff costs for the day are $18,000 including all on costs. Top Shelf Events administration costs are $15,000 for this event. The integrated marketing 2 communications (IMC) is outsourced to Mega Advertising. The total contract for IMC, paid up front is $150,000. For each person attending they receive an Up and Away motivational book and promotional items, costing $25 to produce. Food and beverages are organised and paid for by SEC, with profits for food and beverages retained by SEC.

Up and Away are successful entrepreneurs in their early 30s, two young men and one woman who have a message of success and financial freedom. The target audience for Up and Away are young early career professionals or self-starters in the 22-35 age bracket. Given the target audience, a range of IMC is used including public relations on morning TV, news and talk shows, infomercial TV advertising, radio, search engine optimisation and social media advertising.

Questions:

1. a. The SEC must be paid in full 2 weeks prior to the event. Top Shelf Events would like to have made break even point at this stage. How many tickets must they sell to reach break even point and what is the total revenue at break even point? (Show your calculations)
2. b. Using the fixed and variable costs provided, what is the maximum profit achievable from this event (Show your calculations)?
3. c. Top Shelf Events decide to include an online finance calculator provided by a third party provider, for ALL ticket sold to boost sales. The ticket price stays the same. This is at a cost of $5 per ticket. What are the new quantity break even and maximum profit figures?