You are about to interview with Fairfield Blues for a staff accountant’s position. Upon arriving at the

(LO 1) interview, a human resources specialist hands you a short examination that covers cost-volume-profit analysis.

Required Briefly respond to the following questions.

a. Assume that Fairfield Blues has three full-time salaried employees. It is considering a proposal to reduce all salaries and replace them with a commission based on ticket revenue. What will be the effect of the new compensation plan on the company’s facility costs and variable costs? What might happen to total revenue if management compensation is based in part on a percentage of ticket revenue?

b. If the company experiences an increase in property taxes, will the firm’s break-even point rise or fall?

c. If the costs for each ticket increase, what will be the effect on the company’s unit contribution margin?