Hickory Point Amusement Park sells admission tickets for $50 per person for one visit

Accounting Feb 26, 2021

Hickory Point Amusement Park sells admission tickets for $50 per person for one visit. Variable costs are $15 per visitor and fixed costs are $60,000,000 per month. The company's relevant range extends to 2,000,000 visitors per month. What is Hickory Point's projected operating income if 1,750,000 visitors come to the park during the month?

A) $1,250,000

B) $61,250,000

C) $87,500,000

D) $27,500,000

Expert Solution

Answer: A

Explanation: A)

Sales $50

Less Variable costs 15

= Contribution Margin 35 × 1,750,000 = 61,250,000

Less Fixed 60,000,000

Operating Income $1,250,000

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