You have recently joined Explorer Pte Ltd (‘Explorer’) as an events executive.Your manager, Mr Lim, would like you to plan for a team building event for a client, DHS Bank Limited (‘DHS’), which would be held at Sentosa in one month’s time. DHS will charge each participant a fee for attending the event.

(i) Identify TWO(2) fixed costs and TWO(2) variable costs that would be incurred for the event.

(ii) Research and suggest an appropriate amount for each of the cost item identified in (i).

Explain why you have classified each cost in (i) as a fixed / variable cost. You may use the following template to answer this question.

	Question Part (i)	Part (ii)	Part (iii)
No.	Fixed Costs	Amount ($)	Explanation
1			This is a fixed cost because ….
2			This is a fixed cost because ….
No.	Variable Costs	Amount per participant ($)	Explanation
1			This is a variable cost because ….
2			This is a variable cost because ….

[12 marks]

Using your answers in (a), calculate, using the Contribution Margin Method, the break-even point (in number of participants) for Explorer, given that unit contribution margin is $100. Show your workings clearly.[5 marks]

Suggest to Mr Lim one way Explorer could decrease break-even point without increasing the price charged to each participant. (No calculations are required here).[1 mark]

Answer rating: 100% (QA)

Question Part i Fixed Costs 1 Venue Rental This cost is a fixed cost because it remains the same regardless of the number of participants The cost of renting the venue does not change whether there ar... View the full answer