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Break even point for the number of luxury boxes

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Preliminary plans are underway for construction of a new stadium for a major league baseball team. City officials question the number and profitability of the luxury corporate boxes planned for the upper deck of the stadium. Corporations and selected individuals may purchase a box for $275000. The fixed construction cost for the upper-deck area is estimated to be $4600000, with a variable cost of $150000 for each box constructed.

a. What is the break even point for the number of luxury boxes in the new stadium?

Break even point ________ luxury boxes

b. Preliminary drawings for the stadium show that space is available for the construction of up to 47 luxury boxes. Promoters indicate that buyers are available and that all 47 could be sold if constructed. What is your recommendation concerning the construction of luxury boxes?

What profit is anticipated?

Profit______________

Reference no: EM132660377

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