EXERCISE 6-11 (30 MINUTES)

1. The contribution margin per person would be:

Price per ticket ... $35

Less variable expenses:

Dinner ... $18

Favors and program... 2 20

Contribution margin per person ... $15

The fixed expenses of the dinner-dance total $6,000. The break-even

point would be:

Sales = Variable expenses + Fixed expenses + Profits

$35Q = $20Q + $6,000 + $0

$15Q = $6,000

Q = $6,000 ÷ $15 per person

Q = 400 persons; or, at $35 per person, $14,000

Alternative solution:

Fixed expenses

Break-even point= in unit sales Unit contribution margin

$6,000

= = 400 persons

$15 per person

or, at $35 per person, $14,000.