Sharks Ltd operates in the entertainment industry and one of its activities is to promote entertainment events throughout East Malaysia. The company is examining the viability of a fund-raising concert in Sabah. Estimated fixed costs are $180,000. These include the fees paid to performers, the hire of the venue and advertising costs. Variable costs consist of the cost of a pre-packed buffet which will be provided by a firm of caterers at a price, which is currently being negotiated, but it is likely to be in the region of $10 per ticket sold. The proposed price for the sale of a ticket is $30. The management of Sharks Ltd has requested the following information: -

1. The number of tickets that must be sold to breakeven.

2. How many tickets must be sold to earn $60,000 target profit?

3. What profit would result if 10,000 tickets were sold?

4. What selling price would have to be charged to give a profit of $60,000 on sales of 10,000 tickets, fixed costs of $180,000 and variable costs of $10 per ticket?

5. What is the profit-volume ratio?

6. With reference to part (a), what is the margin of safety given expected sales of 10,000 tickets?

7. Discuss ONE (1) advantage of managers possessing knowledge of the cost-volume-profit analysis.