This year, the Frost family wants to run a charity fundraiser on Christmas Day, and the family has tasked Sam with designing a fixed price lunch package with family entertainment including a visit from Santa Claus and gifts, games and prizes for diners. The lunch will start at 11:30am, and will include a Christmas buffet and an all- included drinks package, finishing at 3pm. This initiative will not impact on the Pink Flamingos existing fixed and variable costs, but it will incur its own fixed and variable costs. The Christmas Day charity fundraiser lunch needs to generate enough revenue to cover its fixed and variable costs, plus $8,000 (before tax) to donate to the charity. Sam has projected sales of 200 adult tickets at $130 per adult, and 400 childrens ticket at $75 per child (a ratio of 1 adult ticket sold for every 2 childrens tickets sold). Sam has reliably identified the fixed and variable costs associated with the Christmas lunch package. Sam needs your help evaluating whether the projected tickets sales will achieve the target of a $8,000 before tax profit on the event, so that $8,000 can be donated to the charity. In the Contribution Margin Information tab in the A2 Case Excel Workbook, you will find Sams projected information on the fixed and variable costs for the Christmas lunch charity fundraiser. While Sam is confident about the costs associated with the lunch event, Sam is less confident about the price projections and is concerned about over-estimating how much the tickets will sell for. For the purposes of this case, assume that the Christmas lunch charity fundraiser can be treated as a standalone product offering that does not impact on the costs incurred by The Pink Flamingo usual operations. Using the templates in the Contribution Margin Information tab, prepare a profit & loss statement for the Christmas lunch charity fundraiser in a traditional format, and in a contribution margin layout. In your written response to this task (approx. 450 words): include your completed templates of the P&L statements in both traditional and contribution margin layout. state the amount of profit or loss (in $) that would be made at Sams predicted level of sales for adults and childrens tickets. identify how many adult tickets and how many childrens tickets would need to be sold for the Christmas lunch chairty fundraiser to make a profit of $8000 before tax (ensure you round your answer up to the nearest whole number, i.e., no decimal places). explain the three main assumptions on which cost-volume-profit analysis is based, and comment on the likelihood of these assumptions holding true in the Pink Flamingo case. make a recommendation to Sam about whether or not to proceed with the Christmas lunch charity fundraiser (assuming that Sam cannot increase the prices or decrease the costs that have been projected), and justify your recommendation. You should consider both financial and non-financial consiserations in making your recommendation.

Cost of Sales Wages Santa Gifts & Prizes Adult Ticket Sales Child Ticket Sales Total Sales Revenue Cost of Sales Gross profit Operating expenses Variable Wages Santa Hire Gifts & Prizes Total operating expenses Operating profit Cost of sales (ingredients used) will be 40% of the adult ticket price and 30% of the children's ticket price. Sam predicts that 25% of ticket revenue will be spent on paying casual staff to work on Christmas Day. Sam has found a person willing to act as Santa Claus for the Christmas Lunch, for a fixed cost of $7500 Every ticketed guest (adults and children) will receive a Pink Flamingo branded gift, at a cost of $15 per gift (i.e., the total gift expense will vary with ticket sales). Sam has allocated a further $2000 to buy prizes for the various games and activities that will be staged during the Christmas lunch (i.e., this cost will not vary with ticket sales, as the same number of prizes will be needed regardless of sales volume). Contribution Margin Layout of P&L Statement Adult Ticket Sales Child Ticket Sales Total Sales Revenue Variable Costs Adult Ticket Cost of Sales Child Ticket Cost of Sales Wages Gifts Contribution Margin Fixed Costs Santa Hire Prizes Operating profit Traditional Format P&L Statement $