Crystal hotel has taken a booking for a corporate meeting to be held in its conference room. The fee to the corporate client is $185 per person. The variable cost per attendee is $60 (for food, cleaning and utilities). Fixed costs are $35,000 (for hiring some furniture and equipment from an outside vendor). The conference facility can hold a maximum of 850 people and early projections suggest it will be almost fully booked. REQUIRED Management have asked you to carry out a CVP analysis for this corporate meeting. Calculate the following: 1. The contribution margin per service (a unit of service is one attendee). 2. The contribution margin ratio. 3. The annual break-even point in number of services and in dollars of revenue. 4. The number of services required to earn a target net profit of $70,000.

5. Report on the importance of CVP analysis and the likely profitability of this meeting, based on your calculations. 6. As a gesture of goodwill, the marketing team has suggested a gift bag be given to each attendee at the end of the conference. The gift bag will cost an additional $3 per person. Make a recommendation on the merit of this suggestion, bearing in mind the target profit.