Determine breakeven point for number of luxury boxes

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Reference no: EM13109849

Preliminary plans are underway for construction of new stadium for major league baseball team. City officials question number and profitability of luxury corporate boxes planned for upper deck of stadium. Corporations and selected individuals may purchase boxes for $100,000 each. Fixed construction cost for upper-deck area is evaluated to be $1,500,000, with variable cost of $50,000 for each box constructed.

a. Determine the breakeven point for number of luxury boxes in new stadium?

b. Preliminary drawings for stadium show that space is available for construction of up to 50 luxury boxes. Promoters point to that purchasers are available and that all 50 could be sold if constructed. What is your suggestions concerning construction of luxury boxes? Determine what profit is anticipated?

Reference no: EM13109849

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