Problem: The Houston Armadillos, a minor-league baseball team, play their weekly games in a small stadium just outside Houston. The stadium holds 10,000 people and tickets sell for $10 each. The franchise owner estimates that the team's annual fixed expenses are $180,000, and the variable expense per ticket sold is $1. (In the following requirements, ignore income taxes.)
Required to do:
Q1. Prepare a fully labeled profit-volume graph for the Houston Armadillos.
Q2. What is the safety margin for the baseball franchise if the team plays a 12-game season and the team owner expects the stadium to be 30 percent full for each game?
Q3. If the stadium is half full for each game, what ticket price would the team have to charge in order to break even?