Answer & Mark Scheme

Fixed costs = £100,000 + £250,000 + £75,000 +£750,000 = £1,175,000 (1 mark)

Variable costs = £15 + (£50/100) = £15.50 x 25000 = £387500 (1 mark)

Total Costs = £1,175,000 + £38750 = £1,562,750 (1 mark)

A. Total revenue = Selling price x Quantity sold = £50.00 x 25000 = £1,250,000 (1 mark)

Profit = total revenue – total costs = £1,250,000 - £1,562,500 = £312,500 loss (1 mark)

B. £60.00 x 25000 = £1,500,000 (1 mark)

£1,500,000 – £1,562,500 = £62,500 loss (1 mark)

C. £70.00 x 25000 = £1,750,000 (1 mark)

£1,750,000 - £1,562,500 = £187,500 - profit (1 mark)

Therefore Simon should choose £70 per ticket as he would make a profit (1 mark)

Total – 10 marks