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dxpayne dxpayne
wrote...
Posts: 930
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6 years ago
Taylor Stadium is evaluating ticket prices for its baseball games. Studies have shown that Monday and Tuesday ball games average less than half the fans of games on other days. The following information pertains to the stadium's normal operations per season.

Average fans per game   5,000 fans
Average fans per Monday/Tuesday game   2,000 fans
Stadium operating hours per season for baseball   300 hours
Stadium capacity   7,000 seats
Variable operating costs per hour   $2,000
Fixed overhead costs per year for all events   $450,000
Marketing costs per season for baseball   $212,500
Customer service costs per season for baseball   $25,000

The stadium is open for 5 hours on each day a game is played. The stadium is available for some type of use 300 days a year. All employees work by the hour except for the administrators. In addition, only one game is played per day and each fan would have only one ticket per game.

Required:
What is the unit cost when establishing a long-run price for ball games assuming all tickets are priced the same?
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
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wrote...
6 years ago
Games = 300 hrs./5 hrs. per game = 60 games
Attendance = 60 × 5,000 = 300,000 fans
Percent use per year for baseball 60/300 = 0.20

Variable costs 300 × $2,000   $600,000
Fixed $450,000 × 0.20   90,000
Marketing   212,500
Customer service   25,000
Total   $927,500

Average cost per fan = $927,500/300,000 = $3.09
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