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# Southwestern University (SWU) Quantitative Analysis Model

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Selling Variable Percent
Item Price/Unit Cost/Unit Revenue
Soft drink \$1.50 \$ .75 25%
Coffee 2.00 .50 25%
Hot dogs 2.00 .80 20%
Hamburgers 2.50 1.00 20%
Misc. snacks 1.00 .40 10%

Maddux's fixed costs are interesting. He estimated that the prorated portion of the stadium cost would be: salaries for food services at \$100,000 (\$20,000 for each of the five home games); 2,400 square feet of stadium space at \$2 per square foot per game; and six people in each of the six booths for 5 hours at \$7 an hour. These costs will be proportionately allocated to each of the products based on the percentages provided in the table above. For example, revenue from soft drinks would be expected to cover 25% of the total fixed costs.

Maddux wants to be sure that he has a number of things for President Starr: (1) total fixed costs that must be covered at each of the games; (2) portion of the fixed cost allocated to each of the items (3) what his unit sales would be at break-even for each item" that is the sales of soft drinks, coffee, hot dogs, and hamburgers are necessary to cover the portion of the fixed cost allocated to each of these items (4) what dollar sales for each of these would be at these break-even points (5) realistic sales estimates per attendee for attendance of 60,000 and 35,000. (In other words, he wants to know how many dollars each attendee is spending on food at his projected break-even sales at present and if attendance grows to 60,000). He felt this latter information would be helpful to understand how realistic the assumptions of his model are. He also wanted to be prepared for any questions that Dr. Starr and others might bring up at the next meeting.

DISCUSSION QUESTION

Prepare the report with the items noted so it is ready for Dr. Starr at the next meeting.

Filed attached w/ same info as above