A traveling production of Grease performs each year. The average show sells 1,500 tickets at $65 per ticket. There are 100 shows each year. The show has a cast of

35, each earning an average of $340 per show. The cast is paid only after each show. The other variable expense is program printing costs of $6 per guest. Annual fixed expenses total $1,072,400.

1.	Compute revenue and variable expenses for each show.
2.	Use the income statement equation approach to compute the number of shows needed annually to break even.
3.	Use the shortcut unit contribution margin approach to compute the number of shows needed annually to earn a profit of $10,111,200 Is this goal realistic? Give your reason.
4.	PrepareGrease's contribution margin income statement for 100 shows each year. Report only two categories of expenses: variable and fixed.

Requirement 1. Compute revenue and variable expenses for each show.

The revenue for each show is $

.

The variable expenses for each show are $

.

Requirement 2. Use the income statement equation approach to compute the number of shows needed annually to break even.

Begin by determining the basic income statement equation.

-

-

=

Operating income

Using the basic income statement equation you determined above, solve for the number of shows to breakeven.

The number of shows needed annually to break even is

.

Requirement 3. Use the shortcut unit contribution margin approach to compute the number of shows needed annually to earn a profit of

$10,111,200 Is this goal realistic? Give your reason.

Begin by selecting the formula.

(

+

) /

=

Target # of shows

Using the equation you determined above, solve for the target number of shows.

The number of shows needed annually to earn a profit of $10,111,200 is

.

The profit goal of $10,111,200 is (unrealistic, realistic) since Grease currently performs 100 shows a year.

Requirement 4. Prepare Grease's contribution margin income statement for 100 shows each year. Report only two categories of expenses: variable and fixed.

Grease
Contribution Margin Income Statement
Year Ended December 31