The treasurer anticipates the following costs for the event, which will be held at the Regency Hotel:

Question:

Room rental ……………………… $300

Dinner cost (per person) ……………. 25

Chartered buses …………………… 500

Favors and souvenirs (per person) …… 5

Band ………………………………. 900

Each person would pay $40 to attend; 200 attendees are expected.

a. Will the event be profitable for the sorority? Show computations.

b. How many people must attend for the sorority to break even?

c. Suppose the sorority encouraged its members to drive to the hotel and did not charter the buses. Further, a planned menu change will reduce the cost per meal by $2. If each member will still be charged $40, compute the contribution margin per person.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...