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Dada Kofi Pub organises beach party for university students under the name Pretty Babes Chill Out. Due to control and safety concerns, Dada Kofi Pub

Dada Kofi Pub organises beach party for university students under the name "Pretty Babes Chill Out". Due to control and safety concerns, Dada Kofi Pub has set an activity level of 200 participants. Presently, he is planning a beach party in collaboration of the Ashesi Students Council as part of their AJC week celebrations. The typical costs he incurs are entry ticket, GHS15 per person; a set of bikinis or shorts per person, GHS 25 per set; a pack of food and drinks per person, GHS35 per pack; wages to a team of live guards for the level of activity, GHS 500 for the team; shuttle service, GHS150 per round trip for the level of activity; fixed administrative expenses per beach party, GHS80. Dada Kofi Pub plans to charge each participant a fee of GHS120 for the entire package. 3 Required: (a) Using the activity level of 200 participants, compute the degree of operating leverage. [4 points] (b) Using the degree of operating leverage you computed, determine the percentage change in net operating income when number of participants falls below the activity level by 35%. [2 points] (c) Estimate the break-even point in terms of number of participants and then in cedi value. [4 points] (d) If Dada Kofi Pub wishes to earn GHS 800 in net operating income for the coming party, how many participants should he obtain? [2 points] (e) Compute the margin of safety in terms of percentage. Explain your answer? [2 points] (f) Suppose another person is organising a similar party and Dada Kofi Pub is worried about losing potential customers. To deal with that, he plans to grant a discount of 15% off the fee; and give each participant a medium-size towel, which costs GHS6.5 each. How will this affect his breakeven point? (Suppose your answer with relevant computations)

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