Question

7. Shelley, Jonathan, and Adrian Stein, the Fundraising Chairperson, are beginning to make plans for next year's rodeo, Shelley believes that by negotiating with local feed stores, inn- keepers, and other business owners, costs can be cut dramatically. Jonathan agrees. After carefully analyzing costs, Jonathan has estimated that the fixed expenses can be pared to approximately $51,000. In addition, Jonathan estimates that variable costs are 4% of total gross receipts. After talking with business owners who attended the rodeo, Adrian is confident that funds solicited from sponsors will increase. Adrian is comfortable in budgeting revenue from sponsors at $25,600. The local youth group is unwilling to provide con- cessions to the audience unless they receive all of the profits. Not having the personnel to staff the concession booth, members of the Circular Club reluctantly agree to let the youth group have 100% of the profits from the concessions. In addition, members of the rodeo committee, recognizing that the net income from programs was only $100, decide not to sell rodeo programs next year. Compute the break-even point in dollars of ticket sales assuming Adrian and Jonathan are correct in their assumptions. Shelley has just learned that you are calculating the break-even point in dollars of ticket sales. She is still convinced that the Club can make a profit using the assump- tions in number 7 above. (a) Calculate the dollars of ticket sales needed in order to earn a target profit of $6,000 (b) Calculate the dollars of ticket sales needed in order to earn a target profit of $12,000. 9. Are the facilities at the fairgrounds adequate to handle crowds needed to generate ticket revenues calculated in number 8 above to earn a $6,000 profit? Show calcula- tions to support your answers. 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 re- main 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 port-a- 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 ban- ners varies with the number of sponsors. Signs and More charged the Circular 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 Spon- sors or Major Sponsors. Therefore, for budgeting purposes you should increase the cost of the banners by the percentage increase in sponsor contributions. (Hint: Round

I only need help with #7,8,10. Thank you!

Answer 1

In case of multiple questions being asked, as a rule, only a maximum of One (1) question can be answered at a time. Further, the first question in the list is itself answered.
Kindly post the remaining questions individually separately.

Q7:

Break Even Point Dollars = Total FixedCost Contribution Margin Ratio

Total FiredCost = 51000

Contribution Margin Ratio = 0.96 (Total Revenue – VariableCosts) Total Revenue 25600 - (25600*0.04) 25600

Therefore,

51000 Break Even Point Dollars = = = 53,125dollars