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