Question 3
0 / 10 points
A downtown bar hosts a live music event in order to increase sales. When analyzing the sales and costs associated with the event the owner creates the following table:
Contractor Costs
Regular Costs
Sales
Hire pop band: $253
Cost to create each drink Selling price for each : $1.69
drink: $6.50
Hire rock band : $278
Employee wages :
$439.85
Selling price for each ticket: $24
Cleaning Costs: $493

Number of drinks sold :
110


Number of tickets sold :
133
What is the contribution margin for a ticket sale?
Hints : 1) Contractor costs are a set price, defined by a negotiated contract. 2) When calculating variable costs in this scenario, your output (number of units sold) should include both the number of drinks sold and the number of tickets sold.

To calculate the **contribution margin** for a ticket sale, we need to use the formula:

\[
\text{Contribution Margin} = \text{Selling Price per Unit} - \text{Variable Cost per Unit}
\]

From the information provided:

1. **Selling price of a ticket** = $24
2. We are asked to calculate the variable cost per unit, which is the cost of producing/selling one unit of output (in this case, each ticket).

### Step 1: Identify Variable Costs
In this case, the variable costs directly related to sales are:
- The **cost to create each drink**: $1.69
- No other direct variable cost is mentioned specifically for tickets, so we'll treat the cost of drinks as the only variable cost per unit of output.

### Step 2: Calculate Contribution Margin for Tickets

Since we're only asked for the contribution margin for a ticket sale, we don't include fixed costs like contractor fees, wages, and cleaning costs. We also don't add drink costs because they relate to drinks, not tickets.

Thus, the **variable cost per ticket** is $0 (since no direct variable cost for tickets is mentioned). Therefore, the contribution margin for each ticket is simply the selling price of the ticket:

\[
\text{Contribution Margin per Ticket} = 24 - 0 = 24
\]

### Final Answer:
The contribution margin for a ticket sale is **$24**.

---

Do you want more details or have any questions about this?  
Here are 5 related questions to think about:

1. How do variable costs affect the contribution margin when more items are sold?
2. What would be the total contribution margin if the bar sold 133 tickets?
3. How do fixed costs like contractor fees influence the overall profitability of the event?
4. How would an increase in the number of drinks sold impact the overall contribution margin?
5. What is the difference between contribution margin and profit margin?

**Tip:** Always separate variable costs (costs that change with the number of units sold) from fixed costs (costs that remain constant) when calculating contribution margins!

A downtown bar hosts a live music event in order to increase sales. When analyzing the sales and costs associated with the event, the owner creates the following table: Contractor Costs Regular Costs Sales Hire pop band: $253 Cost to create each drink: $1.69 Selling price for each drink: $6.50 Hire rock band: $278 Employee wages: $439.85 Selling price for each ticket: $24 Cleaning Costs: $493 Number of drinks sold: 110 Number of tickets sold: 133. What is the contribution margin for a ticket sale?

Learn how to calculate the contribution margin for a ticket sale at a live music event. This problem involves analyzing variable costs, selling price, and the contribution margin formula, helping to understand unit economics. Suitable for students in Grades 10-12.

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