An Introduction to Management Science 13th Edition by David Anderson,Dennis Sweeney ,Thomas Williams ,Jeffrey Camm, Kipp Martin

Exercise 13

Preliminary plans are under way for the construction of a new stadium for a baseball team. City officials have questioned the number and profitability of the luxury corporate boxes planned for the upper deck of the stadium. Corporation and selected individuals may buy the boxes for $100,000 each. The fixed constructions cost for the upper deck a is estimated to be $1,500,000, with a variable cost of $50,000 for each box constructor.
a. What is the breakeven point for the number of luxury boxes in the new stadium?
b. Preliminary drawing for the stadium show that space that space is available for the construction of up to 50 luxury boxes. Promoters indicate that buyers are available and that all 50 could be sold if constructed. What is yours recommendation concerning the construction of luxury boxes? What profit is anticipated?