Question

OPERATING REVENUE AND COST GSU charges all students a mandatory student fee for athletics, which allows students to attend all sporting events free of charge. Management estimates an average attendance of 16,000 students per game. The university also sells tickets at $25 per game to faculty, staff, alumni, and the general public. The operating costs for the stadium are typically incurred in two categories; some costs will be incurred on an ongoing basis at the stadium regardless of the number of games played at the stadium. They include utilities ($12,000 per month), maintenance and operations ($22,000 per month) security ($10,000 per month), and technology ($7,500). The monthly operating cost is $51,500. In addition to the monthly operating costs, management expects to incur costs per game (see Table 5). The total cost per game is $16,180. The GSU Panthers will play six home games and six away games during the football season
Using Cost-Volume-Profit analysis, how many tickets must be sold to break even on operating costs in one game, and one season of the six mentioned home games? Are there any variable costs associated with this analysis or are all costs fixed? Use excel to answer and explain all calculations.

Answer 1

In this Sum, they didn't mention Period of One football Season, whether they are 1 month, 3 months, 6 months or 1 year. Hence I Calculated it each and individually by considering it for various periods of time.

S. No Particulars Gamewise Cost Calculator Fixed Monthly Variables Expenses if A Football if A Football Expenes Per Game season = 1 season = 3 Month Month (D=B*JD) (E=B*JE) if A Football if A Football season = 6 season = 12 Month Month (F=B*JF) (G=B*JG) 12 $ $ $ $ 12,000.00 22,000.00 10,000.00 7,500.00 Estimated Total in Home Games Utilities Maintance Security Technology Event Cost (ref. Table 5) wrokings (G=A+B+C+D Total Cost Per Game +E+F) Ticket Price (I=G/H) Estimated Ticket sales to Meet Expenes $ 12,000.00 $ 22,000.00 $ 10,000.00 $ 7,500.00 $ 97,080.00 $ 148,580.00 $ 36,000.00 $ 66,000.00 $ 30,000.00 $ 22,500.00 $ 97,080.00 $ 251,580.00 $ 72,000.00 $ 132,000.00 $ 60,000.00 $ 45,000.00 $ 97,080.00 $ 406,080.00 $144,000.00 $ 264,000.00 $120,000.00 $ 90,000.00 $ 97,080.00 $ 715,080.00 $ 16,180.00 $ $ $ $ 25.00 5943 25.00 10063 25.00 16243 25.00 28603 (K=1/A) Estimated Ticket to Meet Expenes per Game 991 1677 2707 4767 647 647 647 647 (L=(G-F)/3/H) Estimated Ticket sales to Meet Variable Exp per Game (M=F/J/H) Estimated Ticket sales to Meet Fixed Exp per Game 343 1030 2060 4120 S. No. Cost Incurred per Game (Variable Nature) Particulars No of Personal Time Needed in hr. Cost per hr. Cost Per Game B C (D=A*B*C) Games Day Ushers/Ticket Takers 6 $ 16.00 $ 5,280.00 Police Stadium Traffic Control 6 $ 30.00 $ 2,700.00 Video Graph 1 $ 150.00 $ 600.00 Sound Systems/ Jumberton Operation 1 $ 200.00 $ 800.00 Officials 1 $ 350.00 $ 2,100.00 Elevator Contactor 1 $ 1,250.00 $ 1,250.00 Custodian 6 $ 25.00 $ 2,250.00 Maintance Personals 6 $ 40.00 $ 1,200.00 (I=A+B+C+D+ E+F+G+H) Total Cost Per Games 16180

Hence

if football season = 1 year

To Meet the expense per Game, they need to sell a minimum 4767 tickets per games for $25.00 Each

Notes:

Monthly Expenses are considered Fixed in nature, whether it doesn't change irrespective of Games conducted over the period.

Per Games Costs are considered Variable in nature, Because of the change in No. of games conducted, the Total cost will change accordingly.