ARNEL A.

SATOR

Quantitative Techniques in Business

MBA Section 2

FOOD AND BEVERAGES AT SOUTHWESTERN UNIVERSITY FOOTBALL

GAMES

DISCUSSION QUESTION: Prepare a brief report with the items noted so it is ready for Dr.

Starr at the next meeting.

1. Total fixed cost that must be covered at each of the games.

Salaries: $20,000.00

Stadium: 2400 x $2= $4,800.00

Workers: 6 x 6 x 5 x $7= $1,260.00

Total fixed cost: $20,060.00

2. Portion of the fixed cost allocated to each of the items.

Soft drinks: 25% of $20,060.00 = $6,515.00

Coffee: 25% of $20,060.00 = $6,515.00

Hotdogs: 20% 0f $ 20,060.00 = $5,212.00

Hamburgers: 20% 0f $ 20,060.00 = $5,212.00

Misc. Snacks: 10% 0f $ 20,060.00 = $2,606.00

 3. What his unit sales would be at break-even for each item?

To get the break-even points of each item (selling price less variable cost = result will be the

denominator of the allocated cost)

Soft drinks: $1.50 - $0.75= $0.75, $6515.00 / $0.75 = $8686.67

Coffee: $2.00 - $.50 = $1.50, $6515.00 / $1.50 = $4343.33

Hotdogs: $2.00 - $0.80 = $1.20, $5212.00 / $1.20 = $4343.33

Hamburgers: $2.50 - $1.00 = $1.50, $5212.00 / $1.50 = $3474.67

Misc. Snacks: $1.00 - $0.40 = $0.60, $2606.00 / $0.60 = $4343.33

4. What the dollar sales for each of these would be at these break-even points?

To get the dollar sales multiply selling price to break-even points.

Soft drinks: $1.50 x $8686.67 = $13,030.01

Coffee: $2.00 x $4343.33 = $8,686.66

Hotdogs: $2.00 x $4343.33 = $8,686.66

Hamburgers: $2.50 x $3474.67 = $8,686.68

Misc. Snacks: $1.00 x $4343.33 = $4,343.33

TOTAL BREAK-EVEN SALES = $43,433.34

 5. Realistic sales estimates per attendee for attendance of 60,000 and 35,000.

To break-even, the amount of money that the 60,000 attendees would have to spend:

$43,433.34 / 60,000 = $0.72 each.

If 35,000 attendees: $43,433.34 / 35,000 = $1.24 each.