OPTION 1: Crestview Country Club a. Fixed rental cost of $1,000 b. $11 per person for food OPTION 2: Tallgrass Country Club a. Fixed rental cost of $3,000 b. A caterer who charges $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 $2,000. Tickets are expected to be $35 per person. Local business supporters will donate any other items required for the event. A) Which option provides the least amount of risk? A) Option one B) Option two C) Both options provide the same amount of risk. D) Neither option has risks. E) Without probability assignments, it is not possible to determine the riskier option. 2B) What is the break-even point in units for each option? A) 96 units and 114 units, respectively B) 120 units and 187 units, respectively C) 56 units and 137 units, respectively D) 200 units and 252 units, respectively E) 156 units and 219 units, respectively C) What is the operating income for each option if 600 people attend? A) $14,400 and $12,400 respectively B) $9,800 and $10,200 respectively C) $8,000 and $8,400 respectively D) $7,900 and $8,000 respectively E) $9,600 and $9,400 respectively
OPTION 1: Crestview Country Club a. Fixed rental cost of $1,000 b. $11 per person for food OPTION 2: Tallgrass Country Club a. Fixed rental cost of $3,000 b. A caterer who charges $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 $2,000. Tickets are expected to be $35 per person. Local business supporters will donate any other items required for the event. A) Which option provides the least amount of risk? A) Option one B) Option two C) Both options provide the same amount of risk. D) Neither option has risks. E) Without probability assignments, it is not possible to determine the riskier option. 2B) What is the break-even point in units for each option? A) 96 units and 114 units, respectively B) 120 units and 187 units, respectively C) 56 units and 137 units, respectively D) 200 units and 252 units, respectively E) 156 units and 219 units, respectively C) What is the operating income for each option if 600 people attend? A) $14,400 and $12,400 respectively B) $9,800 and $10,200 respectively C) $8,000 and $8,400 respectively D) $7,900 and $8,000 respectively E) $9,600 and $9,400 respectively
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:OPTION 1: Crestview Country Club
a. Fixed rental cost of $1,000
b. $11 per person for food
OPTION 2: Tallgrass Country Club
a. Fixed rental cost of $3,000
b. A caterer who charges $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 $2,000. Tickets are expected to be $35 per
person. Local business supporters will donate any other items required for the event.
A) Which option provides the least amount of risk?
A) Option one
B) Option two
C) Both options provide the same amount of risk.
D) Neither option has risks.
E) Without probability assignments, it is not possible to determine the riskier option.
2B) What is the break-even point in units for each option?
A) 96 units and 114 units, respectively
B) 120 units and 187 units, respectively
C) 56 units and 137 units, respectively
D) 200 units and 252 units, respectively
E) 156 units and 219 units, respectively
C) What is the operating income for each option if 600 people attend?
A) $14,400 and $12,400 respectively
B) $9,800 and $10,200 respectively
C) $8,000 and $8,400 respectively
D) $7,900 and $8,000 respectively
E) $9,600 and $9,400 respectively
D) What is the degree of operating leverage for each option if 600 people attend?
A) 1.37 and 1.75 times, respectively
B) 1.5 times and 1.72 times, respectively
C) 1.10 and 1.29 times, respectively
D) 0.75 and 1.07 times, respectively
E) Operating leverage is indeterminable.
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