A company is considering the feasibility of promoting a concert.

1. A company is considering the feasibility of promoting a concert. Estimated fixed costs are £60,000 to pay the performers, hire the venue and for advertising. Variable cost consists of a pre packed meal and is estimated to be £10 per ticket sold. The proposed price for the sale of a ticket is £20.
a) Compute the company’s CM ratio and its break-even point in both units and pounds.
b) How many tickets must be sold to meet £30,000 target profit?
c) What profit would result if 8,000 tickets were sold? What is the margin of safety?
d) What selling price would have to be charged to give a profit of £30,000 on sales of 8,000 tickets, fixed costs of £60,000 and variable costs of £10 per ticket?
e) How many additional tickets must be sold to cover the extra cost of television advertising of £8,000?

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