Question
Park competes with Splash World by providing a variety of rides. Storytime sells tickets at $110 per person as a one-day entrance fee. Variable costs
Park competes with
Splash
World by providing a variety of rides.
Storytime
sells tickets at
$110
per person as a one-day entrance fee. Variable costs are
$44
per person, and fixed costs are
$412,500
per month. Under these conditions, the breakeven point in tickets is
6,250
and the breakeven point in sales dollars is
$687,500.
Read the
requirements
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Part 1
Requirement 1. Suppose
Storytime
Park cuts its ticket price from
$110
to
$88
to increase the number of tickets sold. Compute the new breakeven point in tickets and in sales dollars.
Begin by selecting the formula labels and then entering the amounts to compute the number of tickets
Storytime
must sell to break even under this scenario. (Abbreviation used: CM = contribution margin. Complete all input fields. For items with a zero value, enter "0".)
( | Fixed costs | + | Target profit | ) | CM per unit | = | Required sales in units |
Part 2
( | $412,500 | + | $0 | ) | $44 | = | 9,375 |
Part 3
Next, select the formula and then enter the amounts to calculate the sales in dollars
Storytime
needs to break even under this scenario. (Abbreviation used: CM = contribution margin. Enter the contribution margin ratio to the nearest percent, X%. Complete all input fields. For items with a zero value, enter "0".)
( | Fixed costs | + | Target profit | ) | CM ratio | = | Required sales in dollars |
Part 4
( | $412,500 | + | $0 | ) | 50 | % | = | $825,000 |
Part 5
Requirement 2. Ignore the information in Requirement 1. Instead, assume that
Storytime
Park increases the variable cost from
$44
to
$55
per ticket. Compute the new breakeven point in tickets and in sales dollars.
The new breakeven point in tickets is |
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