Southwestern college is planning to hold a fund raising banquet at one of the local country clubs. it has two options for the banquet: option one: crestview country club a. fixed rental cost of $1,000 b. $12 per person for food option two: tallgrass country club a. fixed rental cost of $3,000 b. $8.00 per person for food southwestern college has budgeted $1,800 for administrative and marketing expenses. it plans to hire a band which will cost another $800. tickets are expected to be $30 per person. local business supporters will donate any other items required for the event. which option has the lowest breakeven point?

the Breakeven point for option one is lowest

Explanation:

Given:

Option One;

Fixed rental cost = $1,000

per person cost for food = $12

Option two;

Fixed rental cost = $3,000

per person cost for food = $8

administrative and marketing expenses = $1,800

Cost to hire band = $800

Price of ticket per person = $30

Now,

Total fixed cost under option One

= $1,000 + $1,800 + $800

= $3,600

and,

Total fixed cost under option two

= $3,000 + $1,800 + $800

= $5,600

also,

Contribution margin per ticket for option one

= $30 - $12

= $18

and,

Contribution margin per ticket for option two

= $30 - $8

= $22

Therefore,

Breakeven point for option one

=

=

= 200 person

and,

Breakeven point for option two

=

=

= 255 person

Hence, the Breakeven point for option one is lowest