Anu’s amusement center has collected the following data for operations for the year: total revenues $ 2,400,000 total fixed costs $ 656,250 total variable costs $ 1,350,000 total tickets sold 75,000 required:
a. what is the average selling price for a ticket?
b. what is the average variable cost per ticket?
c. what is the average contribution margin per ticket?
d. what is the break-even point?
e. anu has decided that unless the operation can earn at least $131,250 in operating profits, she will close it down.

what number of tickets must be sold for anu’s amusements to make a $131,250 operating profit for the year on ticket sales?

a)$32

b)$18

c)$14

d) 46,875 units

e) 56,250

Explanation:

a) calculate the average selling price for a ticket sold

the formula = Total tickets sold / The total number of tickets sold

= 2,400,000/ 75,000= $32

b) Calculate average variable cost per ticket sold

the formula = The total variable cost / the total number of tickets sold

= 1,350,000/75,000= $18

c) Calculate the average contribution margin per ticket sold

the formula= The selling price of tickets - the variable cost of the tickets

= $32-$18 = $14

d) Estimate the break-even point

The formula = the total fixed costs/ the derived contribution per unit

=656,250/14 = 46,875 units

e)  Calculate the number of tickets to be sold to earn $131,250 profit

This is an estimation of target units based on target profit

Target Unit= (fixed costs + expected or target profit) / the Contribution per unit

=(656,250 + $131,250) / $14

=56,250 units need to be sold to arrive at the target profit

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