Question

08:30 P @) all 19 all 100% QUESTION 3 ShowBies Son Bhd involves in the leisure and entertainment industry and one of its activities is to promote concerts at locations throughout Malaysia. Currently, the company is examining the viability of a concert in Sarawak. The estimated fixed costs are RM120,000. These include the fees paid to entertainers, the hire of the venue and advertising costs. Variable costs consist of the cost of a pre-packed buffet that will be provided by a firm of caterers at a price, which is currently being negotiated, but it is likely to be in the region of RM100 per ticket sold. The proposed price for the sale of a ticket is RM120. The management team of ShowBies Son Bhd. has requested you to provide the following information: Required: (a) How many tickets must ShowBies Sdn Bhd sell to reach breakeven in unit and Ringgit Malaysia. (b) The quantity of tickets to be sold to earn profit of RM60,000. (c) ShowBies Son Bhd anticipates selling 7,000 tickets. What would be the profit at this sales level? (d) What selling price would have to be charged to give a profit of RM90,000 on sales of 7,000 tickets, fixed costs of RM120,000 and variable costs of RM100 per ticket (e) How many additional tickets must be sold to cover the extra cost of television advertising of RM8,000? (f) A business with high operating leverage will find that its operating profit is particularly sensitive to changes in the level of sales revenue. What is operating leverage? Describe what is meant by a business with high operating leverage? What are the implications for the business of high operating leverage? QUESTION 4 O <