The EDM club of Dallas is considering having DJ Debit to perform on New Year's Eve. The DJ is paid $250,000 per event, plus travel of $40,000. The club two different types of tickets, VIP (balcony) and regular tickets. The two types of customers differ on their alcohol consumption as well. VIP customers tend to buy more expensive drinks and bottle services. Generally, 20% of ticket sales are VIP tickets. The club capacity is 5,000 (20% VIP).

EDM club of Dallas also pays $2,000,000 in local property taxes, fees and other fixed expenses related to the property every year.

Q5.1. How many tickets does EDM club of Dallas need to sell to break even? At this sales volume, how many VIP and how many regular tickets are sold?

Q5.2. Last year, EDM club of Dallas had DJ Credit, which is higher rated that DJ Debit. There were 4,700 attendants (20% VIP). How would you assess the risk that EDM club of Dallas is taking? (Hint: what is the margin of error?).

Q5.3. Last year, EDM club of Dallas had DJ Credit, which is higher rated that DJ Debit. There were 4,700 attendants (20% VIP). If the club has the same number of attendants for DJ Debit, how much will it profit from the event (tax = 20%)?

Q5.4. How many tickets does EDM club of Dallas need to sell to make $100,000 (tax = 20%)? At this sales volume, how many VIP and how many regular tickets are sold?