Chapter 21, Problem S21.12SE

Use the following information to complete Short Exercises S21-10through S21-15.

Funday Park competes with Cool World by providing a variety of rides. Funday Park sells tickets at $70 per person as a one-day entrance fee. Variable costs are $42 per person, and fixed costs are $170,800 per month.

S21-12 Applying sensitivity analysis of changing sales price and variable cost

Learning Objective 4

Using the Funday Park information presented, do the following tasks.

Requirements

1. Suppose Funday Park cuts its ticket price from $70 to $56 to increase the number of tickets sold. Compute the new breakeven point in tickets and in sales dollars.
2. Ignore the information in Requirement 1. Instead, assume that Funday Park increases the variable cost from $42 to $56 per ticket Compute the new breakeven point in tickets and in sales dollars.