Question

I want the answer just for NB 10 I already answered NB 7 and 8 but use my answer to get the solution for 10

NB 7.[A careful analysis of the costs produced the following information for next year: Jonathan has estimated that the fixed expenses can be pared to approximately $51,000. In addition, Jonathan has determined that variable costs are 4% of total gross receipts. Revenue from sponsors can be comfortably budgeted at $25,600. The youth group will not share the profits with the club anymore. Finally, they will no longer sell rodeo programs.] Compute the break-even point in dollars of ticket sales assuming that the above analyses are correct.

Receipts
Contributions from sponsors	$25,600
Receipts from ticket sales	$27,525
Total Receipts	$53,125
Fixed costs	$51,000
Variable costs	$2,125
Total Costs	$53,125
Profit/(Loss)	$0

As you can see from the above table constructed in Excel, the break-even point in dollars of ticket sales, assuming the preceding analyses are correct, is $27,525.

NB 8 Shelly has just learned that you are calculating the break-even point in ticket sales. She is still convinced that the club can make a profit using the assumptions in number 7 above.

      (a)   Calculate the dollars of ticket sales needed in order to earn a target profit of   

              $6,000.

Receipts
Contributions from sponsors	$25,600
Receipts from ticket sales	$33,775
Total Receipts	$59,375
Fixed costs	$51,000
Variable costs	$2,375
Total Costs	$53,375
Profit/(Loss)	$6,000

As the above table shows, in order to earn a target profit of $6,000, ticket sales, in dollars, must be $33,775.

      (b)   Calculate the dollars of ticket sales needed in order to earn a target profit of                       $12,000.

Receipts
Contributions from sponsors	$25,600
Receipts from ticket sales	$40,025
Total Receipts	$65,625
Fixed costs	$51,000
Variable costs	$2,625
Total Costs	$53,625
Profit/(Loss)	$12,000

Here the above table shows us that in order to earn a target profit of $12,000, $40,025 in ticket sales are needed.

10. Prepare a budgeted income statement for next year using the estimated revenues from

sponsors and other assumptions in number 7 above. In addition, use ticket sales based

on the target profit of $12,000 estimated in 8(b). The cost of the livestock contractor,

prize money, sanctioning fees, entertainment, judging fees, rent, and utilities will remain

the same next year.

Changes in expenses include the following: Members of the Club have decided to

eliminate all costs related to contestant hospitality by soliciting a tent and food for the

contestants and taking care of the “Contestant Hospitality Tent” themselves. The county

has installed permanent restrooms at the arena, eliminating the need to rent porta-potties.

The rodeo committee intends to pursue arrangements to have hotel rooms, hay,

and children’s hats provided at no charge in exchange for sponsorships. The cost of banners

varies with the number of sponsors. Signs and More charged the Horseback Club

$130 for each Exhibiting Sponsor banner and $48 for each Major Sponsor banner. At

this time there is no way to know whether additional sponsors will be Exhibiting Sponsors

or Major Sponsors. Therefore, for budgeting purposes you should increase the

cost of the banners by the percentage increase in sponsor contributions. (Hint: Round

all calculations to three decimal places.) By checking prices, the Horseback Club will be

able to obtain insurance providing essentially the same amount of coverage as this year

for only $600. For the first rodeo the Club ordered 10,000 tickets. Realizing the constraints

on available seating, the Club is ordering only 5,000 tickets for next year, and

therefore its costs are reduced 50%. The sand for the arena for next year will be $300,

and miscellaneous fixed costs are to be budgeted at $100.

Thank you and let me know if I missed any information

Answer 1

	Break Even $ Sales
S No	Particulars	Amount
a	Fixed Expenses ($)	51,000
b	Budgeted Gross receipts ($)	25,600
c	Variable Cost @ 4% ($)	1,024
d	Contribution (b-c) ($)	24,576
e	Contribution Margin Ratio (d/bx100)	96.00%
f	Break Even $ Sales (a/e)	53,125

Dollars of ticket sales needed in order to earn a target profit of $6,000.
Let Total Sales be x
Sales	x
Variable Cost	0.04x
Contribution	x-0.4x
Fixed Cost	51,000
Target Profit	6,000

So,
x-0.4x-51000 = 6000
x=59,375
Total Sales ($)	59,375
Budgeted Gross receipts Sponsor($)	25,600
Budgeted receipt from ticket sale ($)	33,775
Hence, Budgeted Ticket Sales should be $33,775 to earn target profit of $6,000

Dollars of ticket sales needed in order to earn a target profit of $12,000.
Let Total Sales be x
Sales	x
Variable Cost	0.04x
Contribution	x-0.4x
Fixed Cost	51,000
Target Profit	12,000

So,
x-0.4x-51000 = 12000
x=65,625
Total Sales ($)	65,625
Budgeted Gross receipts Sponsor($)	25,600
Budgeted receipt from ticket sale ($)	40,025
Hence, Budgeted Ticket Sales should be $40,025 to earn target profit of $12,000

Disclaimer - For the below part, question is unclear about various facts like Cost of tickets ordered, percentage increase in sponsor for determining banner costs, etc. Therefore, below solution is solely based on my assumptions.

Budgeted Income Statement
Particulars	Amount ($)
Revenue
Sponsors	25,600
Ticket Sales at Target Profit of $12,000	40,025
Total Sales	65,625
Expenses
Variable Cost @ 4%	2,625
Fixed Expenses	51,000
Exhibiting Sponsor banner	130
Major Sponsor banner	48
Insurance	600
Sand	300
Misc Fixed Cost	100
Total Expenses	54,803
Net Profit	10,822