For the past 20 years a charity organisation has held an annual dinner and dance with the primary intention of raising funds.

This year there is concern that an economic recession may adversely affect both the number of people attending the function and the advertising space that will be sold in the programme published for the occasion.

Based on past experience and current prices and quotations, it is expected that the following costs and revenues will apply for the function:

A sub-committee, formed to examine more closely the likely outcome of the function, discovered the following from previous records and accounts:

Required:

Calculate the expected value of the profit to be earned from the dinner and dance this year.

Transcribed Image Text:

Cost: Dinner and dance Hire of premises Band and entertainers Programme: Revenues: Dinner and dance Programme: Raffle prizes Photographer Food at $12 per person (with a guarantee of 400 persons minimum) A fixed cost of $2,000 plus $5 per page Price of tickets Average revenue from: Raffle Photographs Average revenue from advertising $ 700 2,800 800 200 $20 per person $5 per person $1 per person $70 per person