The ArizonaArizona State Fair is one of the largest state fairs in the United States. It draws nearly one million visitors over the fifteenfifteen-day period each July and August. The fair is anon-profit organization. It is self-supporting and needs, at aminimum, to break even by generating revenues through various activities. Among the sources of revenue for The ArizonaArizona State Fair are the revenues generated from the food vendors. A number of food vendors offer a wide variety of fair foods toattendees, including funnel cakes, gyros, cotton candy, milkshakes, and corn dogs.

Assume the following schedule of fees for food vendors at the ArizonaArizona State Fair:

•$88per linear foot for ground service fees (front footage xdepth)

•18%of concessions (food sales)

•$35 per 15-dayparking permit

•$330for 100-amp electrical service

•$60 per 15-day fair admittance pass (one is included with basic rentalagreement)

Cosmic Concessions is a vendor at the fair. It has a food booth that requires 10 feet of front frontage and is 17 feet deep.Cosmic Concessions expects to have sales averaging $6,500 per day for each of the 15 days of the fair. It has a total of three employees who will work the fair throughout the entire 15-day period. CosmicCosmic pays for eachemployee's fair admission and parking. Assume that the employee wages for the 15-day period are expected to total $8,085.

Requirements:

1. Of the fees listed in the schedule, which fees are variable with respect to the number of customers at the booth? Which fees are fixed?

2. What is the projected total fee that Cosmic Concessions will need to pay to The Arizona State Fair assuming it meets its expected sales level for each of the 15 days of the fair?

3. Assume that variable costs are 60% of sales revenue. (This 60% includes the 18% concession fee charged by The Arizona StateFair.) How much in total sales revenue is needed for Cosmic Concessions to break even?

4. Calculate Cosmic Concessions' margin of safety both in dollars and percentage.