London shows. The average show sells 1,300 tickets at $60 per ticket There are 1

Question

London shows. The average show sells 1,300 tickets at $60 per ticket There are 125 shows per year No additional shows can be helkd as the theater ts atso used by othes Celeb production companies. The average show has a cast or 65, each earning a net average of $340 per show. T Annual foxed costs total $728,000 Read the requirements The cast s paid afer each show The other variable cost is a program-printing cost of $8 per guest Requirement 1. Compule revenue and variable costs for each show Cost of programs Cost of performers Choose from any list or enter any number in the input fields and then continue to the next question O Type here to search

Explanation / Answer

Solution 1:

Revenue for each show = 1300 * $60 = $78,000

Variable expense per show = 65 * $340 + 1300*$8 = $32,500

Solution 2:

Let number of show needed to break even = X

Now

$78,000X - $32,500X = $728,000

X = 16 shows

Solution 3:

Target profit = $5,687,500

Target contribution = $5,687,500 + $728,000 = $6,415,500

Contribution margin per show = $78,000 - $32,500 = $45,500

Nos of shows required to earn target profit = Target contribution / Contribution margin per show

= $6,415,500 / $45,500 = 141 shows

The goal is not realstic as no additonal shows beyond 125 could be held as theatre is used by other production companies.

Solution 4:

Celeb Production Contribution margin income statement For year ended December 31, 2018 Particulars Amount Sales revenue (125 * $78,000) $9,750,000.00 Variable cost (125 * $32,500) $4,062,500.00 Contribution margin $5,687,500.00 Fixed costs $728,000.00 Net operating company $4,959,500.00

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