Question

Please explain each problem in steps. I would like to study problems 13-17

13,500 units 20,000 units D. Problems 13-17 are based on the following information: The date is January 1, 2018 and Party Town (PT) has just wan the bidding process to host a party on March0,- 2018. PT is charging their guests an admission fee of $100 per person. PT has rented a banquet hall for $900 that will accommodate up to 100 people. PT has contracted with Cathy's Catering to cater the party for $10- per person that attends (up to 100). PT estimates that they will have $5 of depreciation expense from January 1, 2018 through March 31, 2018. Do not round the units (people) to the nearest person. Round to two decimals. Additional Information: At the party, it is estimated that 80 % of the guests will pay at the door in cash and 20% will pay between April 1, 2018 and April 30, 2018. The estimated party guests are 80. Cathy's Catering will be paid half their fee (Cathy requires the estimate to be the max of 100 people) on March 1, 2018 and the balance will be paid on April 15, 2018. The banquet hall will be paid in full on March 1, 2018. Choose closest answer. 13. What is the budgeted breakeven point in sales dollars? $800 $900 $1,005 $1,105 A)

Answer 1

13	Break even point in sales dollars=Fixed expenses/Contribution margin ratio
	Fixed expenses:
				$
	Banquet hall rent			900
	Depreciation			5
	Total			905
	Contribution margin ratio=Contribution margin/Revenue
	Contribution margin=Revenue-Variable expenses
	Revenue=$ 100
	Variable expenses=Catering charges=$ 10
	Contribution margin=100-10=$ 90 per unit
	Contribution margin ratio=90/100=0.9
	Break even point in sales dollars=905/0.9=1005.556=$ 1005
	Answer is
	C. $ 1005
14	Margin of safety in $=Actual sales revenue-Break even point in sales dollars
	Actual sales revenue=Number of guests*Revenue per guest=80*100=$ 8000
	Margin of safety in $=8000-1005=$ 6995
	Answer is
	B. $ 6995
15	Degree of operating leverage=Total contribution/Operating income
	Total contribution=Number of guests*Contribution margin=80*90=$ 7200
	Operating income:
					$
	Contribution margin				7200
	Less: Fixed costs				905
	Operating income				6295
	Degree of operating leverage=7200/6295=1.14
	Answer is
	C. 1.14
16					$
	Beginning balance				2000
	Add: Cash received
	80% guests paid		(80*80%*100)		6400
	Total cash available				8400
	Less:
	Catering charges		(100*10*50%)		500
	Banquet hall rent				900
	Total payment				1400
	Ending balance				7000
	Answer is
	C. $ 7000
17	Operating income:
					$
	Revenue		(80*100)		8000
	Less: Variable costs		(80*10)		800
	Contribution				7200
	Less: Fixed costs				905
	Operating income				6295
	Answer is
	B. $ 6295
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