PART 3: Break Even Calculation: (2.5 marks) 3. A) LIVE EVENT PRICING: Considering the variable and fixed costs below. Calculate the breakeven number of events required PER MONTH assuming the price for each event is $3,200 and it takes 30 hours to complete a piece of art. (Show your work for full marks) Variable costs: o Canvas $150 o Paints and supplies $50 o Artist labour $55 per hour Fixed Costs/Month: o Rent: $1,600 o Heat and hydro: $175 o Advertising and Promotion: $250 b) Considering DIRECT COST PRICING only, calculate the following (2.5 marks) What is the Markup Percentage? What is the Margin Percentage?
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Fixed Costs ÷ (Price - Variable Costs) = Breakeven Point in Units.
$60,000 ÷ ($2.00 - $0.80) = 50,000 units.
$50,000 ÷ ($2.00-$0.80) = 41,666 units.
$60,000 ÷ ($2.00-$0.60) = 42,857 units.
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