LaComedia Dinner Theater sells tickets for dinner and a show for $40 each. The cost of providing dinner is $26 per ticket and the fixed cost of operating the theater is $100,000 per month. The company can accommodate 12,000 patrons each month. What is the projected monthly income if 10,000 patrons visit the theater each month?

The projected monthly income under those conditions would be $40.000

Explanation:

Total Income equals total revenue minus total cost

I = R - C

Total cost, equals fixed costs plus variable costs

Total Cost = Fixed costs + Variable costs

10.000 people paid for a ticked $40 each, therefore total revenue is:

10.000 x $40 = $400.000

The variable costs are $26 per dinner, and 10.000 dinners were sold:

10.000 x $26 = $260.000

Finally, the fixed cost for operating the theater is $100.000. This cost does not depend on the amount of tickets sold. You might sell 0 tickers, and still have to pay the $100.000.

Total Income therefore is = $400.000 - $260.000 - $100.000

= $40.000