CVP Discussion Assignment

Novik Enterprises operate in the leisure and entertainment industry and one of its activities is to
promote concerts in Nairobi. The company is considering the viability of a concert in Nyeri town.
Estimated FC is sh.60, 000. These include fee to perform, the hire of venue and advertisement cost.
Variables costs of a pre-pocked buffet, which will be provided by a firm of caterers at a price, which
is currently being negotiated, but it’s likely to be in the region of sh.100 per ticket sold. The
projected price for the sale of a ticket is sh.200.

The management of Novik has requested the following information:

a) Unit contribution margin and contribution margin ratio

b) The number of tickets that that must be sold to breakeven and total sales in shillings
c) How many tickets must be sold to earn sh.30,000 target profit.
d) What profit would result of 8000 tickets were sold?
e) What selling price would be charged to give a profit of sh.300000 from the sales of 8,000
units?
f) How many additional tickets must be sold to cover the extra cost of television advertisement
of sh.8000?