Question

A traveling production of Grease performs each year. The average show sells 1.500 tickets at 540 per ticket. There are 110 shows each year. The show has a cast of 75, each earning an average of $350 per show. The cast is paid only after each show. The other variable expense is program printing costs of $5 per guest. Annual fixed expenses total $472,500. Read the requirements Requirement 1. Computer revenue and variable expenses for ench show. The revenue for each show is C The variable openses for each show are 5 Requirement 2 Use the income statement equation approach to compute the number of shows needed annually to break even Bégin by determining the basic income statement equation - Operating income Using the basic income statement equation you determined above, solve for the number of shows to breakeven. The number of shows needed annually to break even is Requirement 3. Use the shortcut unit contribution margin approach to compute the number of shows needed annually to eam a profit of $3.200.000 Is this goal realistic? Give your reason. Begin by selecting the formula = Target # of shows Using the equation you determined above, solve for the target number of shows The number of shows needed annually to earn a profit of $3,255,000 is The profit goal of $3,255,000 is since Grease currently performs 110 shows a year Requirement 4. Prepare Grease's contribution margin income statement for 110 shows each year. Report only two categories of expenses: variable and fixed Choose from any list or enter any number in the input fields and then continue to the next question O a (0) B 3:28 PM O

Answer 1

Number of Tickets sold (a) 1,500 per show $ Selling price per ticket (b) 40.00 Number of shows (c) 110 shows Requirement 1. (ax b Revenue per show 60,000.00 Payment to cast per show (75 x $350) Other Variable expense (1500 tickets x $5) $ 26,250.00 per show $ 7,500.00 Total Variable expense for each show 33,750.00 Requirement 2. ($60000 x 110 shows) ($33750 x 110 shows) $66,00,000.00 $37,12,500.00 $ 4,72,500.00 Total Revenue less: Total Variable exp less: Annual fixed expense $24,15,000.00 Operating Income $3712500 $660000 $472500 $2415000 (operating Income) Contribution per show ($60,000 - $33,7500) $ 26,250.00 $ 4,72,500.00 Annual fixed expense Annual Fixed Exp/Contribution per show Break even shows (numbers) $472500 $26250 shows per year 18

Requirement 3. $32,55,000.00 Required Profit Annual fixed expense $ 4,72,500.00 $37,27,500.00 (a) Contribution per show (b) 26,250.00 142 shows (a/b) Target of Shows ($3255000 142 shows $472500) / $26250 (Target #of shares) The profit Goal of $3,255,000 is not possible since Grease currently performs 110 shows a year Requirement 4. Grease Contribution Margin Income Statement Year ended December 31 66,00,000 Total Revenue Less: Total expenses 37,12,500 Contribution 28,87,500 Less: Annual fixed Costs 4,72,500 24,15,000 Net Income

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