Question

utt wauld nid this 0 this increase cost content number of subscribers? the annual change have on the break-even t cost scenario in (B). How much would the annual subscription to maintain the same break-even as in (A) need to change in order 3 Break-even number of guests for a theme park ADM- MusicLand Theme financial data are available for analysis: Park has an average daily admission price of $60 per guest. The following Daily operating fixed costs Variable daily operating cost per guest Average daily concession revenue per guest Average daily variable cost of concession items per guest $750,000 24 30 16 Additional operating data indicate that the park averages 24,000 daily guests during the week days and 40,000 average daily guests on Saturdays and Sundays. A. Determine the break-even number of guests per day at the theme park B. How much profit does MusicLand earn on an average weekday? C. How much profit does MusicLand earn on an average weekend day? D. Determine the revised break-even if the daily fixed costs increased to $1,000,000. E. Would t e theme park still remain profitable for an average weekday under the scenario in (D)?

Answer 1

a)

Break even number of guests at the theme park = Fixed costs/Contribution margin per unit

Contribution margin per unit = Selling price - variable cost

Selling price = $60 + $30 ( concession revenue)

Variable cost = $ 24 + $16

Variable cost = $40

Contribution margin per unit = $90 - $40

Contribution margin per unit = $50

Breakeven number of guests = 750,000 / 50

Breakeven number of guests = 15,000 guests

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b) Profits = Revenues - costs

Profits = $90 * 24,000 - [ $750,000 + $40 * 24,000 ]

Profits = $ 450,000

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c)

Profits = $90 * 40,000 - [ $750,000 + $40 * 40,000 ]

Profits = $ 1,250,000

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d) Revised breakeven = $1,000,000 / 50

Revised breakeven = 20,000

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