Question

The Social Club is conducting a breakeven analysis to determine how many tickets it must sell at $20 each to break even on the Holiday Dance. Fixed costs are $4,000, and the variable cost per person is $10. To break even, the Social Club must sell _______tickets.
A) 800
B) 500
C) 400
D) 80

Answer 1

Answer:

correct option is C) 400

Explanation:

given data

selling cost  = $20

Fixed costs = $4,000

variable cost = $10

to find out

how many tickets sell

solution

first we get here contribution per unit that is express as

contribution per unit = selling cost - variable cost    .................1

contribution per unit = $20 - $10

contribution per unit = $10

and

so breakeven unit will be here as

breakeven unit = $\frac{fixed\ cost}{contribution}$   .............2

breakeven unit = $\frac{4000}{10}$

breakeven unit = 400 ticket

so correct option is C) 400