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The events committee of Olympia Sport Association is considering 3 different venues to stage a...

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Accounting

The events committee of Olympia Sport Association is considering 3 different venues to stage a major fundraising event. Tickets for event will be sold at 12 and variable cost per person is 5.20 for all 3 venues.

Venue A: maximum capacity of 500 people and cost 1,300 to hire.

Venue B: maximum capacity of 1000 people and cost 3,500 to hire.

Venue C: maximum capacity of 2000 people and cost 9,000 to hire.

a) Calculate the break-even point for each venue (A,BandC). (

6Marks)

b) Which venue would be the most profitable at maximum capacity and explain why. (show your workings) (4 Marks) c) A month after the fundraising event Olympia has decided that they will be offering an award evening at the venues clubhouse: The tickets will be sold at 35 per person and 150 people are expected to attend. The committee will be spending 2,000 in entertainment and prizes. The variable cost of the meal is 10.

i) How many tickets do they need to sell to make a target profit of 500 (2 Marks)

ii) What is the margin of safety in number of tickets and as a percentage (%) (4 Marks)

d) Discuss the advantages and limitations of CVP analysis. (4 Marks)

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