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Stubs-R-Us is a local event ticket broker. Last year, the company sold 940,000 tickets with an...

Stubs-R-Us is a local event ticket broker. Last year, the company sold 940,000 tickets with an average commission of $5. Because of the general economic climate, Stubs expects ticket volume to decline by 20 percent. In addition, employees at a local insurance company headquarters accounted for 5 percent of Stubs’ volume. The headquarters relocated to another state and all the employees closed their accounts. Offsetting these factors is the observation that the average commission per sale is likely to increase by 5 percent because the average ticket prices are expected to be larger in the coming year.

Required: Estimate commission revenues for Stubs-R-Us for the coming year.

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Answer #1
Expected ticket sales for the coming year 714400 =940000*(1-5%)*(1-20%)
X Average commission per ticket 5.25 =5+(5*5%)
Commission revenues for the coming year 3750600
7 5
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