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[داماس]

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The Key West Kennel Club is a dog-racing track. Its revenue is derived mainly from attendance and a fixed percentage of the pari mutuel betting. Its expenses for a 90-day season are as follows:

Wages of cashiers and ticket takers $150,000

Commissioner's salary 20,000

Maintenance (repairs, etc.) 20,000

Utilities 40,000

Other expenses (depreciation, insurance, advertising, etc.) 100,000

Purses: total prizes paid to winning racers 810,000

The track made a contract with PK, Inc., to park the cars. PK charged the track $4.80 per car. A survey revealed that, on the average, three persons arrived in each car and that half the attendees arrived by private automobiles. The others arrived by taxi and public buses.

The track's sources of revenue are:

Rights for concession and vending $60,000

Admission charge (deliberately low) $1 per person

Percentage of bets placed 10%

Required:

1. Assume that each person bets $25 a night.

a. How many persons have to be admitted for the track to break even for the season?

b. If the desired operating profit for the year is $270,000, how many people would have to attend?

2. If a policy of free admission brought a 20% increase in attendance, what would be the new level of operating profit? Assume that the previous level of attendance was 600,000 people.

3. If the purses were doubled in an attempt to attract better dogs and thus increase attendance, what would be the new break-even point? Refer to the original data and assume that each person bets $25 a night.

[yhyh]

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