Utah Metropolitan Ballet is located in Salt Lake City. The company is housed in the Capi¬

tol Theater, one of three buildings that make up the Bicentennial Arts Center in downtown Salt Lake City. The Ballet company features five different ballets per year. For the coming season, the five ballets to be performed are The Dream, Petronshka, The Nutcracker, Sleeping Beauty, and Bugaku.

The president and general manager has tentatively scheduled the following number of performances for each ballet for the coming season:

To produce each ballet, costs must be incurred for costumes, props, rehearsals, royal¬ ties, guest artist fees, choreography, salaries of production staff, music, and wardrobe. These costs are fixed for a particular ballet regardless of the number of performances. These direct fixed costs are given below for each ballet:

The auditorium where the ballet is presented has 1,854 seats, which are classified as A, B, and C. A seats have the best view, ranging to C seats for the worst. Information con¬
cerning the different types of seats is given below:

Required:
1. Compute the expected revenues from the performances that have been tentatively scheduled. Prepare a segmented income statement.
2. Calculate the number of performances of each ballet required to produce a break-even segment margin.
3. Calculate the number of performances of each ballet required for the company as a whole to break even. If you were the president and general manager, how would you alter the tentative schedule of performances?
4. Suppose that it is possible to offer a matinee of the popular Nutcracker. Seats would sell for $5 less than in the evening, and the rental of the auditorium will be $200 less. The president and general manager feels that 5 matinee performances are feasible and be¬
lieves that 80% of each type of seat can be sold. What effect will the matinee have on the company's profitability? On the break-even point?
5. Suppose that no additional evening performances can be offered beyond those tenta¬
tively scheduled. Assume that the company will offer 5 matinee performances of The Nutcracker. Also, the company expects to receive $60,000 in government grants and con¬
tributions from supporters of the fine arts. Will the company break even? If not, what actions would you take to bring revenues in line with costs? Assume any additional performances of The Nutcracker are not feasible.

Transcribed Image Text:

The Dream Petroushika The Nutcracker 55 20 Sleeping Beauty Bugaku 10 5