Gross margin and contribution margin The Museum of Art is preparing for its annual appreciation dinner for contributing members. Last year, 500 members attended the dinner. Tickets for the dinner were $20 per attendee. The profit report for last year's dinner follows.

Ticket sales $10,000 Cost of dinner 11,000 Gross margin -$1,000 Invitations and paperwork 3,000 Profit (loss) -$4,000 This year the dinner committee does not want to lose money on the dinner. To help achieve its goal, the committee analyzed last year's costs. Of the $11,000 cost of the dinner, $6,000 were fixed costs and $5,000 were variable costs. Of the $3,000 cost of invitation and paperwork, $2,500 were fixed and $500 were variable. 1 Prepare last year's profit report using the contribution margin format. 2 The committee is considering expanding this year's dinner invitation list to include volunteer members (in addition to contribution members). If they expand the dinner invitation list, they expect attendance to double. Calculate the effect this will have on the profitability of the dinner.