Problem

The Museum of Modern Art is preparing for its annual appreciation dinner for contributing members. Last year, 550 members attended the dinner. Tickets for the dinner were $30 per attendee. Theprofit report for last year's dinner follows.

Ticket sales $ 16,500
Cost of dinner 16,900
Gross margin (400)
Invitations and paperwork 3,0000
Profit (loss) $ (3,400)

This year the dinner committee does not want to lose mobey on the dinner. To help achieve its goal, the committee analyzes last year's costs. OF the $16,900 cost of the dinner, $7,000 were fixed costs and $9,900 were variable costs. Of the $3,000 cost of invitations and paperwork, $2,175 were fixed and $825 were variable.

Requirements

1. Prepare last year's profit report using the contribution margin format.

2. The committee is considering expanding this year's dinner invitation list to include volunteer members (in addition to contributing? members). If the committee expands the dinner invitation list, it expects attendance to double. Calculate the effect this will have on the profitability of the dinner assuming fixed costs will be the same as last year.