Question
Noviki enterprise operates in the leisure and entertainment industry and one of its activities is to promote concerts at locations throughout Kenya. The company is
Noviki enterprise operates in the leisure and entertainment industry and one of its activities is to promote concerts at locations throughout Kenya. The company is examining the viability of concerts in MKU. Estimated fixed costs are sh 60,000. These include the fees paid to performers, the hire of the venue and advertising costs. Variable costs consists of the cost of a pre-packed buffet which will be provided by the firm of caterers at a price, which is currently being negotiated, but it is likely to be in the region of sh 10 per ticket sold. The proposed price for the sale of a ticket is sh 20. The management of Noviki has requested the following information:
(i) The number of tickets that must be sold to break - even. (2 marks)
(ii) How many tickets must be sold to earn sh 30,000 target profit? (4 marks)
(iii) What profit would result if 8000 tickets were sold? (4 marks)
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