Question

A semiprofessional baseball team near your town plays two home games each month at the local baseball park. They split the concessions 50/50 with the city, but keep revenue from ticket sales for themselves. The city charges the team $100 each month for the three-month season. The team pays the players and manager a total of $1,000 a month. The team charges $10 for each ticket, and the average customer spends $7 at the concession stand. Attendance averages 30 people at each home game. In order to break even, how many tickets does the team need to sell for each game?

Answer 1

Answer:

41 tickets per game

Explanation:

The team's fixed monthly costs are:

$1,000 (wages and salaries) + $100 (municipal fee) = $1,100 per month

Since the team plays at home twice a month, the fixed costs allocated to each game are $550 (= $1,100 / 2).

Contribution margin per person = $10 (ticket price) + $3.50 (1/2 of concession stand's revenue) = $13.50

Break even point = fixed costs / contribution margin = $550 / $13.50 = 40.7 tickets which must be rounded up to 41 tickets per game