Question

Famous Productions performs London shows. The average show sells 1,300 tickets at $60 per ticket. There are 145 shows per year. No additional shows can be held as the theater is also used by other production companies. The average show has a cast of 65, each earning a net average of $340 per show. The cast is paid after each show. The other variable cost is a program-printing cost of $8 per guest. Annual fixed costs total $728,000.

Answer 1

1.Sales Revenue per show = Number of Tickets*Price per ticket

= 1300*60

= $78000

Variable cost per show

Cost per unit*Number of units

Cost of program = 1300*8 = $10400

Cost of performers = 65*340 = $22100

Total variable cost = $32500

2.Sales Revenue – Variable costs – Fixed costs = Target Profit

Number of shows to break even = 728000/45500

= 16 shows

3.Number of shows required = (5687500+728000)/45500

= 144.96 shows

i.e. 145 shows

Yes, realistic

Contribution Margin Income Statement
Sales Revenue	11,310,000
Less: Variable costs	4,712,500
Contribution Margin	6,597,500
Less: Fixed costs	728,000
Net Operating Income	5,869,500