Lee Enterprises operates in the leisure and enter-tainment industry and one of its activities is to promote concerts at locations throughout the world. The company is examining the viability of a concert in Singapore. Estimated fixed costs are £60 000. These include the fees paid to performers, the hire of the venue and advertising costs. Variable costs consist of the cost of a pre-packed buffet that will be provided by a firm of caterers at a price, which is currently being negotiated, but it is likely to be in the region of £10 per ticket sold. The proposed price for the sale of a ticket is £20. The management of Lee has requested the following information: 1 The number of tickets that must be sold to break even (that is, the point at which there is neither a profit nor a loss). 2 How many tickets must be sold to earn £30 000 target profit? 3 What profit would result if 8000 tickets were sold?
Lee Enterprises operates in the leisure and enter-tainment industry and one of its activities is to promote concerts at locations throughout the world. The company is examining the viability of a concert in Singapore. Estimated fixed costs are £60 000. These include the fees paid to performers, the hire of the venue and advertising costs. Variable costs consist of the cost of a pre-packed buffet that will be provided by a firm of caterers at a price, which is currently being negotiated, but it is likely to be in the region of £10 per ticket sold. The proposed price for the sale of a ticket is £20. The management of Lee has requested the following information:
1 The number of tickets that must be sold to break even (that is, the point at which there is neither a
2 How many tickets must be sold to earn £30 000 target profit?
3 What profit would result if 8000 tickets were sold?
4 What selling price would have to be charged to give a profit of £30 000 on sales of 8000 tickets, fixed costs of £60 000 and variable costs of £10 per ticket?
5 How many additional tickets must be sold to cover the extra cost of television advertising of £8000?
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