Question

Music Society is a​ not-for-profit organization that brings guest artists to the​ community's greater metropolitan area. The music society just bought a small concert hall in the center of town to house its performances. The lease payments on the concert hall are expected to be $ 2000 per month. The organization pays its guest performers $ 600   per concert and anticipates corresponding ticket sales to be $2500 per concert. The music society also incurs costs of approximately $ 400 per concert for marketing and advertising. The organization pays its artistic director $ 55000 per year and expects to receive $ 52000 in donations in addition to its ticket sales.Music Society is a​ not-for-profit organization that brings guest artists to the​ community's greater metropolitan area. The music society just bought a small concert hall in the center of town to house its performances. The lease payments on the concert hall are expected to be $ 2000 per month. The organization pays its guest performers $ 600   per concert and anticipates corresponding ticket sales to be $2500 per concert. The music society also incurs costs of approximately $ 400 per concert for marketing and advertising. The organization pays its artistic director $ 55000 per year and expects to receive $ 52000 in donations in addition to its ticket sales.

Calculate the breakeven​ point, then enter the amounts in the formula to calculate the number of concerts needed in order to break even under the scenarios: Fixed Costs - Fixed Income/CM per concert = Concerts needed to break even

Answer 1

Break Even point = (Fixed Costs-Fixed Income)/Contribution Margin per concert

Fixed Costs = $55,000+$2,000*12 = $79,000

Less: Fixed Income = $52,000

Extra Fixed Cost = $27,000

Ticket Price per Concert = $2,500

Less: Paid to guest performers = $600

Less: Marketing and Advertising Cost = $400

Contribution Margin per Concert = $1,500

Break-Even point = 27,000/1,500

=18 concerts