Rocky Mountain Waterpark sells half of its tickets for the regular price of $75. The other half go to senior citizens and children for the discounted price of $35. Variable cost per guest is $15 for both groups , and fixed costs total $60,000 per month. What is Rocky Mountain's breakeven point in total guests? Regular guests? Discount guests?

Break even in total guests is 1500 guests.

Break even in Regular guests is 750 guests.

Break even in Discount guests is 750 guests.

Explanation:

Break even in units is the total number of units where the total revenue equals total cost. The formula for break even in units is,

Break even in units = Fixed costs / Contribution margin per unit

a.

To calculate the composite break even point or a common break even point when there are more than one product, we use weighted average contribution per unit.

Weighted average contribution per unit = Contribution per unit of Product A * Weight of product A in sales mix  +  Contribution per unit of product B * Weight of Product B is sales mix

Weighted average contribution margin per unit = (75 - 15) * 0.5 + (35 - 15) * 0.5  =  40 per unit

Break even in total guests = 60000 / 40  =  1500 units/guests

Break even per product = Total break even in units * weight of product in sales mix

Break even in Regular guests = 1500 * 0.5 = 750 units

Break even in Discounted guests = 1500 * 0.5 = 750 units

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