Budgeting Exercise 3

Working Out the Break Even Point (Case A)

Case A
In this simple problem your task is to work out the number of
participants required to ensure the event breaks-even.
 
The data you need to make your calculation is as follows:
Total Fixed Costs: $10,080
Variable Cost per Participant: $2.00
Ticket Price per Participant: $20

Income
No. of Ticket Total
Participants Price Income
Guests 560 20 11200

Total Income 11200

Expenditure
No. of Cost per
Participants Participant Total
Variable Costs 560 2 1120

Variable Cost 1120

Fixed Costs 10080

Total Cost 11200

Profit 0

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Budgeting Exercise 3
Working Out the Break Even Point (Case B)

Case B
This problem is much the same problem as in Case A except that you are given the number
of participants and you must work out what is the minimum price that spectators must be
charged.
 
The data you need to make your calculation is as follows:
Total Fixed Costs: $10,000
Variable Cost per Participant: $5.00
Number of Participants Required: 500

Income
No. of Ticket Total
Participants Price Income
Guests 500 25 12500

Total Income 12500

Expenditure
No. of Cost per
Participants Participant Total
Variable Costs 500 5 2500

Variable Cost 2500

Fixed Costs 10000

Total Cost 12500

Profit 0

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Budgeting Exercise 3
Working Out the Break Even Point (Case C)

Case C
The club committee are putting on an awards evening in the clubhouse. The ticket
price will be $30 per person and it is expected that 100 people will attend.
The committee will spend $1500 on entertainment and prizes.
What is the maximum cost of the meal per person that can be afforded, if the
event is not to make a loss.

Income
No. of Ticket Total
People Price Income
Guests 100 30 3000

Total Income 3000

Expenditure

Variable Costs
Guests 100
Cost of Food per Guests 15

Variable Cost 1500

Prizes and Entertainment 1500

Fixed Costs 1500

Total Cost 3000

Profit 0

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 Budgeting Exercise 3
Working Out the Break Even Point (Case C)

g on an awards evening in the clubhouse. The ticket

d it is expected that 100 people will attend.
00 on entertainment and prizes.
he meal per person that can be afforded, if the

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Budgeting Exercise 3
Working Out the Break Even Point (Case D)
Case D
The committee of a sport organisation is considering three different venues to stage a major fundraising event. Venue A has a maximum seating
capacity of 500 people and costs $1,200 to hire. Venue B has a maximum capacity of 1000 and costs $3,500 and Venue C has a maximum capacity of
2000 and costs $9,000. If the variable cost for each participant is $5.20, which venue would be the most profitable at maxmum capacity.

Venue A - max 500 seats Venue B - max 1000 seats Venue C - max 2000 seats
Income Income Income
No. of Ticket Total No. of Ticket Total No. of Ticket Total
Spectators Price Income Spectators Price Income Spectators Price Income
Guests 500 10 5000 Guests 1000 10 10000 Guests 2000 10 20000

Total Income 5000 Total Income 10000 Total Income 20000

Expenditure Expenditure Expenditure

Variable Costs Variable Costs Variable Costs

Spectators 500 Spectators 1000 Spectators 2000
Variable Cost per Spectators 5.2 Variable Cost per Spectators 5.2 Variable Cost per Spectators 5.2

Variable Cost 2600 Variable Cost 5200 Variable Cost 10400

Seats Cost Seats Cost Seats Cost

Venue A 500 1200 Venue A 1000 3500 Venue A 2000 9000
Fixed Costs 1200 Fixed Costs 3500 Fixed Costs 9000

Total Cost 3800 Total Cost 8700 Total Cost 19400

Profit 1200 Profit 1300 Profit 600

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Budgeting Exercise 3
Working Out the Break Even Point (Case E)

Case E
Total Fixed Costs: $20,000
Variable Cost per Participant: $2.00
Ticket Price for accompanied children: $5
Ticket Price for adults: $20
Expected Ratio: 2 Adults to every 1 child

Income
No. of Ticket Total
People Price Income
Children 512.82 5 2564.1
Adults 1025.64 20 20512.8

Total Income 23076.9

Expenditure

Variable Costs
Total Spectators 1538.46
Variable Cost per Spectator 2

Variable Cost 3076.92

Fixed Cost 20000

Total Cost 23076.92

Profit -0.02

Note: The key to this scenario is contained in the yellow and

green cells. Change the number of children (GREEN cell) and
the number of adults instantly changes to be twice the
number of children.

All cells except GREEN cell are protected.

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Budgeting Exercise 3
Working Out the Break-Even Point (Case F)

Case F

Fixed Costs if total spectators is 20,000 or less: $200,000

Fixed Costs if over 20,000 spectators: $300,000
Variable Cost per Participant: $3.00
Ticket Price per Participant: $ 15

Income
Total Spectators 25000
Spectator Ticket Price 15

Total Income 375000

Expenditure

Variable Costs
Total Spectators 25000
Variable Cost per Spectator 3

Variable Cost 75000

Fixed Costs
Fixed Cost (Level 1) - Spectators 20,000 or less 200000
Fixed Cost (Level 2) - Spectators over 20,000 300000

Fixed Cost 300000

Total Cost 375000

Profit 0

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