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Charity Auction - MGMAT MSR

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Author Message
Current Student
User avatar
Affiliations: UWC
Joined: 09 May 2012
Posts: 399
Location: India
GMAT 1: 620 Q42 V33
GMAT 2: 680 Q44 V38
GPA: 3.43
WE: Engineering (Entertainment and Sports)
Followers: 23

Kudos [?]: 279 [0], given: 100

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Charity Auction - MGMAT MSR [#permalink] New post 19 Aug 2012, 22:59
Email from executive director to charity staff
May 5, 3:14 p.m.


Our annual Grand Ball and Silent Auction will be on October 12th this year. The venue has a maximum capacity of 1,098 people (including servers and other workers).
We need to determine how to maximize attendance while not going over the capacity limit. In addition, I’d like to offer 100 lots for auction, and we will be running a
pledge table again this year. Our goal is to raise a total of $250,000 from the auction and pledges combined.

-----------------------------------------------------------------------------------------------------------
Email from auction coordinator in response to the director’s May 5, 3:14 p.m. message
May 6, 9:33 a.m.

Last year, we invited 1,813 people and 1,492 accepted. Of those, 1,378 actually attended. We could probably plan on similar response and attendance rates this year.
All of the companies who gave items to be auctioned last year are donating again this year, except for 2, so that accounts for 56 lots. In addition, my team has already
secured an additional 12 items for the auction; I’m certain we can reach 100 items. Last year, we raised $131,000 from pledges made during the event and the auction
brought in an additional $73,000. This year’s lots should go for about the same price on average, so the 42 additional auction lots this year should be enough to raise the
additional $50,000 needed.

-----------------------------------------------------------------------------------------------------------

Email from executive director to auction coordinator in response to the auction coordinator’s May 6, 9:33 a.m. message
May 9, 12:48 p.m.


Maybe we should think about moving to a larger venue so we make sure that we don’t exceed the capacity limit. Last Saturday night, the opera’s benefit gala was almost
shut down because they had too many people. Assume that about 10% of the people will be servers and other workers. We would lose our deposit though. Well, if our
projections are accurate, we should be fine at this venue.

------------------------------------------------------------------------------------------------------------

(1) Consider each of the following statements. Indicate Yes if the information in the three emails support the statement; otherwise, indicate No.

Yes No
i The executive director would rather change to a larger venue than risk exceeding the capacity of the currently-booked venue.

ii The auction coordinator believes that the charity will be able to reach its goal to raise $250,000 at this year’s event.

iii The auction coordinator is certain that the charity has the necessary data to determine how many people to invite in order to maximize attendance while not exceeding the capacity limit.


(2) For each of the following plans, select Yes if the plan will definitely allow the charity to reach its planned goal to raise $250,000 from the auction and pledges. Otherwise, select No.

Yes No
i The charity follows its plan as stated in the emails, maximizing the number of invited guests and achieving the same rates as in the prior year for the pledge money raised per person and the auction money raised per item auctioned.

ii The charity moves to a larger venue; 1,500 invited guests attend but the charity is able to offer only 90 items for auction.

iii The charity maximizes its number of invited guests at the planned venue; it auctions 100 items at an average of $1,300 per item and receives an average of $150 per invited guest in pledges.

(3) If the charity is able to raise an average of $1,500 per lot (auctioned item), and assuming that the maximum capacity of the venue will be met, what must be the approximate average pledge per invited guest in order to reach the $250,000 goal?

A $90
B $100
C $110
D $120
E $130


SOULTIONS:

[Reveal] Spoiler:
(1) NO, YES, NO
(2) NO, NO, YES
(3) B
Charity Auction - MGMAT MSR   [#permalink] 19 Aug 2012, 22:59
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