The Masquerade is a casino that operates on a river. Casinos attain a profit by collecting the bets/wagers placed by guests, but giving back on average a % of revenues as winnings for the customers and incurring costs of running the operations in a casino utilizing various resources. In a typical month, the casino's gambling area (excluding the food, beverages and lodging) had the following revenues and expenses: There were 500,000 guests. You can assume that all guests will wager the average amount always. Revenues (wagers by guests) $10,000,000 Winnings given back to Guests $3,000,000 (as a % of revenues) Labor Costs (salaries) $1,000,000 Commissions for employees $700,000 (as a % of revenues) Utilities (unrelated to the number of guests) $600,000 Utilities (related to the number of guests) $300,000 Depreciation on Casino buildings and equipment $2,000,000 Other monthly admin. and facility costs $400,000 The casino pays combined state and federal taxes equal to 25% of profit before taxes. What is the breakeven in dollars? How many Diamond Jubilee guests are needed or how much should be the total wagers by guests in a month for the casino to earn an after-tax income of $2,000,000?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The Masquerade is a casino that operates on a river. Casinos attain a profit by
collecting the bets/wagers placed by guests, but giving back on average a % of
revenues as winnings for the customers and incurring costs of running the
operations in a casino utilizing various resources. In a typical month, the
casino's gambling area (excluding the food, beverages and lodging) had the
following revenues and expenses:
There were 500,000 guests. You can assume that all guests will wager the
average amount always.
Revenues (wagers by guests)
$10,000,000
Winnings given back to Guests
$3,000,000 (as a % of revenues)
Labor Costs (salaries)
$1,000,000
Commissions for employees
$700,000 (as a % of revenues)
Utilities (unrelated to the number of guests)
$600,000
Utilities (related to the number of guests)
$300,000
Depreciation on Casino buildings and equipment $2,000,000
Other monthly admin. and facility costs $400,000
The casino pays combined state and federal taxes equal to 25% of profit before
taxes.
What is the breakeven in dollars?
How many Diamond Jubilee guests are needed or how much should be the
total wagers by guests in a month for the casino to earn an after-tax income of
$2,000,000?
Transcribed Image Text:The Masquerade is a casino that operates on a river. Casinos attain a profit by collecting the bets/wagers placed by guests, but giving back on average a % of revenues as winnings for the customers and incurring costs of running the operations in a casino utilizing various resources. In a typical month, the casino's gambling area (excluding the food, beverages and lodging) had the following revenues and expenses: There were 500,000 guests. You can assume that all guests will wager the average amount always. Revenues (wagers by guests) $10,000,000 Winnings given back to Guests $3,000,000 (as a % of revenues) Labor Costs (salaries) $1,000,000 Commissions for employees $700,000 (as a % of revenues) Utilities (unrelated to the number of guests) $600,000 Utilities (related to the number of guests) $300,000 Depreciation on Casino buildings and equipment $2,000,000 Other monthly admin. and facility costs $400,000 The casino pays combined state and federal taxes equal to 25% of profit before taxes. What is the breakeven in dollars? How many Diamond Jubilee guests are needed or how much should be the total wagers by guests in a month for the casino to earn an after-tax income of $2,000,000?
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