Fun Time Amusement Park provides a variety of attractions
Fun Time sells tickets at $50 per person as a one-day entrance fee. Variable costs are $28 per person, and fixed costs are $178,800 per month.
Assume that Fun Time reduces fixed costs from $178,800 per month to $166,500 per month. Compute the new breakeven point in tickets and in sales dollars.
What will be an ideal response
Unit contribution margin = Net sales revenue per unit - Variable costs per unit
= $50 = $28 = $22
Required sales in units = (Fixed costs + Target profit) / Contribution margin per unit
= ($166,500 + $0 ) / $22
= 7,569 tickets
Required sales dollars = Selling price per ticket x Required ticket sales
= $50 x 7,569 = $378,450
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