Question: The Windsor Chamber of Commerce is planning its annual event

The Windsor Chamber of Commerce is planning its annual event. There are two possible plans:
a. Hold the event at a local hotel. The fixed rental cost would be $2,700 and the charge for meals would be $110 per person.
b. Hold the event at the University of Windsor. The fixed rental fee for the facility would be much higher at $7,000, and the Chamber would also spend another $500 in permits.
However, the Chamber could use the local caterer and the per-unit charge for meals would drop to $75 per person.
The Chamber of Commerce budgets $5,000 for administration and marketing. Entertainment will cost $4,000 regardless of the venue chosen. Tickets to the event will be $175 per person. All other costs, such as door prizes and drinks, will be paid for by corporate sponsors.
1. Compute the breakeven point for each plan in terms of tickets sold.
2. For each plan, compute the operating income of the event (a) if 100 people attend, (b) if 250 people attend. Comment on your results.
3. At what level of tickets sold will the two plans have the same operating income?

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  • CreatedJuly 31, 2015
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