Ralph is considering a bid for the hotdog and softdrink concession at the 14-football games for the season. There will be 7 college games and 7 professional games.Average attendance at college games in 30,000; at professiona games attendance is 60,000. Ralph estimates that he sells hot dog and one softdrink for each two persons attending a game. Revenue & cost are as follows:

Hotdog Softdrinks

Selling Price $1.50 $1.00

Variable costs

Hotdog $0.32

Roll $0.14

Mustard, onion,etc. $0.02

Softdrink & Ice $0.22

In addition, salespeople earn 20% commission on all sales. Fixed costs per game are $8,000 for rentals of heating, cooking, mixing, and cooling equipment. The stadium management requested that bids be made in the form of royalties on sales.The highest percentage os sales bid will win the contract.

REQUIRED: 1. What percentage of sales can Ralph pay as royalty to the stadium and earn $180,000 for the season?

2. If Ralph bids 12% of sales, what income can he expect?

3. Assume that Ralph gets the concession at a royalty 12% of sales.He wants to know how much margin of safety he has in 2 ways. He is uncertain about total attendance and about the percentage of total attendees who buy a hotdog and drink.What is the breakeven point for the season, expressed as (a) total attendance assuming one hotdog and drink per two attendees, and (b) the percentage of attendance who must buy a hotdog and drinks if total attendance is as expected but the number of hotdogs and drinks each buys is uncertain.

4. What kinds of information does Ralph needs if he is also deciding to bid for the concession of baseball games at the same stadium?

5. After forcasting attendance for football games, Ralph learns that the star quarterback of the local professional team will retire before the coming season.What effect does this information have on his planning?