You sit on the board of directors for a nonprofit history museum. The museum charges a small admission fee to cover its operating expenses. The objective is to break even. A local benefactor recently pledged an annual donation of $ 25,000 to the museum.

In a recent strategy meeting, the president suggested the museum raise the price of admission, so that the companys "break-even point would be lower." The financial manager responded by agreeing they should raise the price and stated the company would be "less likely to incur a loss."

How will the donation affect the museum's break-even level? What would happen to the break-even point if the admission price and unit variable costs increased by the same dollar amount? Do you agree with the president and / or the financial manager? Why?