break even analysis

Question

 symphony incurs $3000,0000 of fixed costs each year. variable person for each person  orchestras performances is $24. If average charge for a ticket to attend a performance of  Symphony is $100, how many tickets must it sell each year to break even?

Answer 1

Hi Melissa,

 

You have a few typos in your post, so before I begin to answer the question, I have to state what I believe the question really is.

 

1) the fixed cost is $300,000 per year

2) the variable cost per person in attendance is $24

3) the revenue per person in attendance is $100.

 

So, we want to solve the following equation.

 

300000 + 24x = 100x

where x = # people in attendance

 

Solving for x

 

300000 = 76x

3047..37 = x

 

There must be 3,047.37 people in attendance to break even.  But since you can't have partial people, the orchestra must sell 3,048 tickets.

 

Please note, my assumptions/understanding as noted in 1, 2 & 3, above may not be correct.