Now we are going to include the food and beverage service in our cost structure. The Town and Country charges a flat rate of $500 for the service, plus $15 for each seminar participant. For our analysis, with the increased cost, we are going to project a price of $60 per attendee for the seminar.
1. What is the contribution margin (1) stated as a per-unit dollar amount? What is the contribution margin ratio; that is, (2) the contribution margin as a percentage?
(1) (2)
2. Calculate the break-even point in (1) number of units, and (2) dollars of sales.
(1) (2)
3. Figure the level of sales necessary to achieve a target income of $600. Indicate your answer in (1) number of units and (2) dollars of sales.
(1) (2)
4. (1) Calculate the company’s operating income if we were able to achieve sales of 150 attendees? (2) Calculate the company’s operating leverage at that income level.
(1) (2)
5. Indicate the company’s margin of safety at the target level of $600 net income (see 3. above). State your answer in (1) number of units, (2) dollars of sales, and (3) as a percentage of sales.
(1) (2) (3)