Nrvik Enterprise operates in the leisure and entertainment industry and one of its activities is to promote concerts at locations throughout Europe. The company is examining the viability of a center in London. Estimated fixed costs are 60,000 pounds. These include the fee paid to the performers, the hire of the venue and advertising cost. Variable costs consists of a pre-packed buffet that will be provided by a firm of caterers at a price, which is currently being negotiated, but it likely to be around 10 pound per ticket sold. The proposed price for the sale of the ticket is 20 Pounds. The management of Norvik has requested following information:

A):

B):

i. The number of tickets that must be sold to break even (the point at which there is no profit nor loss)

ii. How many tickets must be sold to earn 30,000 pounds profit?

iii. How many additional tickets must be sold to cover the extra cost of television

advertising (Fixed Cost) of 8000 (compared to Break even in question 1)?

i. What profit would result if 8000 tickets were sold?

ii. What selling price would have to be charged to give a profit of 30,000 on sales of

8000 tickets, fixed costs of 60,000 and variable cost of 10 per ticket?