3-52 Gross margin and contribution margin. The Museum of America is preparing for its annual appre- ciation dinner for contributing members. Last year, 525 members attended the dinner. Tickets for the dinner were $24 per attendee. The profit report for last year's dinner follows. Ticket sales $12,600 ba 15,300 nite Cost of dinner texmon s no bee UNS ba A Gross margin Invitations and paperwork Profit (loss) (2,700) boo 2,500 do$ (5,200) This year the dinner committee does not want to lose money on the dinner. To help achieve its goal, the com- mittee analyzed last year's costs. Of the $15,300 cost of the dinner, $9,000 we re fixed costs and $6,300 were variable costs. Of the $2,500 cost of invitations and paperwork, $1,975 were fixed and $525 were variable. 1. Prepare last year's profit report using the contribution margin format. 2. The committee is considering expanding this year's dinner invitation list to include volunteer members (in addition to contributing members). If the committee expands the dinner invitation list, it expects at- tendance to double. Calculate the effect this will have on the profitability of the dinner assuming fixed Costs will be the same as last year.
3-52 Gross margin and contribution margin. The Museum of America is preparing for its annual appre- ciation dinner for contributing members. Last year, 525 members attended the dinner. Tickets for the dinner were $24 per attendee. The profit report for last year's dinner follows. Ticket sales $12,600 ba 15,300 nite Cost of dinner texmon s no bee UNS ba A Gross margin Invitations and paperwork Profit (loss) (2,700) boo 2,500 do$ (5,200) This year the dinner committee does not want to lose money on the dinner. To help achieve its goal, the com- mittee analyzed last year's costs. Of the $15,300 cost of the dinner, $9,000 we re fixed costs and $6,300 were variable costs. Of the $2,500 cost of invitations and paperwork, $1,975 were fixed and $525 were variable. 1. Prepare last year's profit report using the contribution margin format. 2. The committee is considering expanding this year's dinner invitation list to include volunteer members (in addition to contributing members). If the committee expands the dinner invitation list, it expects at- tendance to double. Calculate the effect this will have on the profitability of the dinner assuming fixed Costs will be the same as last year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:3-52 Gross margin and contribution margin. The Museum of America is preparing for its annual appre-
ciation dinner for contributing members. Last year, 525 members attended the dinner. Tickets for the dinner
were $24 per attendee. The profit report for last year's dinner follows.
Ticket sales
$12,600
ba
15,300
nite
Cost of dinner
texmon s no bee
UNS
ba A
Gross margin
Invitations and paperwork
Profit (loss)
(2,700)
boo
2,500
do$ (5,200)
This year the dinner committee does not want to lose money on the dinner. To help achieve its goal, the com-
mittee analyzed last year's costs. Of the $15,300 cost of the dinner, $9,000 we re fixed costs and $6,300 were
variable costs. Of the $2,500 cost of invitations and paperwork, $1,975 were fixed and $525 were variable.
1. Prepare last year's profit report using the contribution margin format.
2. The committee is considering expanding this year's dinner invitation list to include volunteer members
(in addition to contributing members). If the committee expands the dinner invitation list, it expects at-
tendance to double. Calculate the effect this will have on the profitability of the dinner assuming fixed
Costs will be the same as last year.
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