An internationally renowned professor specialising in management accounting has agreed to conduct a one-day seminar at a university for management executives. The Head of the Graduate School initially offered the professor the regular compensation package of a business-class airfare and accommodation (\$3000) and a \(\$ 2000\) lecture fee.

The university will charge \(\$ 260\) for each executive attending the one-day seminar and the fixed costs for conducting the seminar will be:

The variable costs per participant attending the seminar are expected to be:

Required:
a Calculate the university's break-even point in sales dollars if the professor accepts the regular compensation package of \(\$ 3000\) for expenses and a \(\$ 2000\) lecture fee.
b The professor, however, views the \(\$ 2000\) lecture fee as limiting his potential earnings, and has requested that he receive 50 per cent of the net operating profit to the university from the one-day seminar, and no other payments (including no airfare or accommodation costs). The Head of the School agrees after confirming that the professor is willing to pay his own airfare and accommodation (which will cost the professor \$3000) and deliver the seminar irrespective of the number of executives signed up to attend. Calculate:
i the number of executives that must attend in order that the professor receives a total payment from the university of \(\$ 6000\).
ii the minimum number of executives that must attend in order that the university does not make a loss on running the seminar (i.e. the professor receives no fee at all).

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Advertising in magazines Mailing of brochures Administrative labour Charge for use of lecture auditorium $ 4000 $ 3.000 $ 2000 $ 1.000 $10 000