# ﻿Food and Beverages at Southwestern University Football Games

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Food and Beverages at Southwestern University Football Games

The total fixed cost per game includes salaries, rental fees, and cost of the workers in the six booths. These are: Salaries  \$20,000
Rental fees  2,400  \$2  \$4,800
Booth worker wages  6  6  5  \$7  \$1,260
Total fixed cost per game  \$20,000  \$4,800  \$1,260  \$26,060 The cost of this allocated to each food item is shown in the table:

Percent
Allocated fixed
Item
revenue cost Soft drink
25%
\$6,515
Coffee
25%
\$6,515
Hot dogs
20%
\$5,212
Hamburgers
20%
\$5,212
Misc. snacks
10%
\$2,606
The break-even points for each of these items are found by computing the contribution to profit (profit margin) for each item and dividing this into the allocated fixed cost. These are shown in the next table:

NUM="3"> Selling
Var.
Profit
Percent
Allocated
Break even
Item
price cost margin revenue fixed cost volume Soft drink
\$1.50
\$0.75
\$0.75
25%
6515
8686.67
Coffee
\$2.00
\$0.50
\$1.50
25%
6515
4343.33
Hot dogs
\$2.00
\$0.80
\$1.20
20%
5212
4343.33
Hamburgers
\$2.50
\$1.00
\$1.50
20%
5212
3474.67
Misc. snacks
\$1.00
\$0.40
\$0.60
10%
2606
4343.33

To determine the total sales for each item that is required to break even, multiply the selling price by the break even volume. The results are shown:

Selling
Break even
Dollar volume
Item
price volume of sales
Soft drink
\$1.50
8686.67
\$13,030.00
Coffee
\$2.00
4343.33
\$8,686.67
Hot dogs
\$2.00
4343.33
\$8,686.67
Hamburgers
\$2.50
3474.67
\$8,686.67
Misc. snacks
\$1.00
4343.33 \$4,343.33
Total

\$43,433.34
Thus, to break even, the total sales must be \$43,433.34. If the attendance is 35,000 people, then each person would have to spend \$43,433.34/35,000  \$1.24. If the attendance is 60,000, then each person would have to spend \$43,433.34/60,000  \$0.72. Both of these are...

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