Question

Hamilton 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 $3,000 per month. The organization pays its guest performers $1,400 per concert and anticipates corresponding ticket sales to be $3,500 per concert. The music society also incurs costs of approximately S500 per concert for marketing and advertising. The organization pays its artistic director S44,000 per year and expects to receive $40.000 in donations in addition to its ticket sales. Read the requirements Requirements 1 and 2. Determine the formula used to 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 presented in requirement 1 and requirement 2. (Abbreviations used: CM = Contribution margin, Var. = Variable) Fixed costs Fixed Income ) + CM per concert = Concerts needed to break even Reg. 1 1 $ 80,000 $ 40,000 1,600 25 Reg. 2 ($ 112.000 $ 40.000 1,600 45 What is the music society's operating income (loss) if it hires the new marketing director and holds 42 concerts per year? The music society would have an operating loss of i Requirements 1. 2. If the Hamilton Music Society just breaks even, how many concerts does it hold? In addition to the organization's artistic director, the music society would like to hire a marketing director for $32,000 per year. What is the breakeven point? The music society anticipates that the addition of a marketing director would allow the organization to increase the number of concerts to 42 per year. What is the music society's operating income floss) if it hires the new marketing director? The music society expects to receive a grant that would provide the organization with an additional $32,000 toward the payment of the marketing director's salary. What is the breakeven point if the music society hires the marketing director and receives the grant? 3. Print Done Choose from any list or enter any number in the input fields and then click Check Answer ? 1 pant Clear All Check Answer remaining

Answer 1

1	Concerts needed to break even=(Fixed costs-Fixed income)/CM per concert
	Fixed costs:
				$
	Lease payment		(3000*12)	36000
	Pay to artistic director			44000
	Total			80000
	Fixed income=Donation received=$ 40000
	CM per concert:
				$	$
	Ticket sales revenue				3500
	Less:variable costs
	Pay to guest performers			1400
	Marketing and advertising			500	1900
	CM per concert				1600
	Concerts needed to break even=(80000-40000)/1600=25
2	Concerts needed to break even=(Fixed costs-Fixed income)/CM per concert
	Fixed costs:
				$
	Lease payment		(3000*12)	36000
	Pay to artistic director			44000
	Pay to marketing director			32000
	Total			112000
	Concerts needed to break even=(112000-40000)/1600=45
	Operating income/(loss)=(Number of concerts*CM per concert)-(Fixed costs-Fixed income)=(42*1600)-(112000-40000)=$ -4800
	The music society would have an operating loss of $ 4800
3	Concerts needed to break even=(Fixed costs-Fixed income)/CM per concert
	Fixed income
		$
	Donation	40000
	Grant	32000
	Total	72000
	Concerts needed to break even=(112000-72000)/1600=25