Vocational :: Business and Management Studies:

VocationalA. cypher break up up to now point on the basis of average knob per week.- give hitherto = fixed cost ploughsh be- Fixed be = 35,000 + 8,650 = 43,650- Contribution = Selling price Variable cost- Selling price = cl per person- Variable costs = 35 + 3 +5 + 10 = 53- Contribution = cl - 53 = 97- Break even = 43,650 97 = 450 guests- This shows that 450 guests are to be held within a 30 week period.Therefore for the charity to break even 15 guest are required eachweek.In ordination to heck that the answer I came to is chastise I will take the450 guests (answer I came to) and, should the answer be correct,income (fixed costs + variable costs) would be equal to 0.Income = 450 x 150= 67,500Fixed costs = 43, 650Expenditure = 450 x Variable costs= 450 x 53= 23, 850Fixed costs + Variable costs = 23,850 + 43,650= 67,500Therefore income (fixed costs + variable costs) = 67,500 - 67,500= 0B. Assume that the holiday home is full (20 guests) for the wholeperiod (30 week s). Calculate the margin of safety and the sales pricethat could be charged per guest to break-even.-Margin of safety = maximum add of residents break even-Max number of residents = 600-Break even = 450Therefore margin of safety = 600 450 = 150 guestsWhen referring to the margin of safety equalling 150, in simple termsthis means that the charity can drop 150 guests and still not make aloss. By dividing 150 by 30 it can also be seen that they can drop 5guests per week making the break even point of 15 guests. sales PriceSelling price x Contribution= 150 x 97= 14,550Maximum income = 150 x 600 = 90,000 (with 600 being the entiretynumber of guests.)90,000 14,550= 75,45075,450600= 125.75This tells us that 125.75 can be offered to residents to break even.In order to look into that the resulting answer is in fact correct I willtotal all costs and, if the my original answer is correct, they shouldequal 75,450Fixed costs = 43,650Variable costs = 53 x 600 (number of guests)= 31,80043,65 0 + 31,800 = 75,450-75,450600 =125.75 (per guest)Therefore in order for the charity to break even a charge of 125.75can be given to each person.C. The charity can extend its accommodation by renting an adjoiningproperty, this would allow a further 10 guests.