CASE 4-1 ROTHMUELLER MUSEUM [LO 1, 2 1. Estimated attendance is 10,000, and admission to the In 1928, Francis P. Rothmueller, a nate, established an endowment to fund the Rothmueller Museum in Minneapolis. The museum currently has a $30 2. Some photographs will come from the Rothmueller collec million endowment, but it also has substantial operating costs and continues to add to its eclectic collection that encompasses paintings, photographs, drawings, and design objects post-1900.3. Cost of packing and transportation to and from Rothmuelle Annual earnings from the endowment (approximately $2,500,000 4. Insurance to cover photographs during the run of the in 2016) are not sufficient to cover operations and acquisitions and the museums trustees and president are conscious of the Northwest railroad mag- exhibit is $15. tion while others will be leased from other museums and collectors. exhibition head photography curator sistant photography curator Morga to generate income from admissions, special exhibits, and 5. Twenty-five percent of annual salary for Alice museum store sales Alice Morgan, photographic curator, is in the process of plan- 6. Twenty-five percent of annual salary for William Jacob,a ning an exhibition of Ansel Adams photographs that will run from September through November 2017. Below is a preliminary 7. Cost of guard service for exhibition. budget, prepared by Alice, of revenue and costs associated with 8. Painting of exhibition room to off-white background the exhibition: 9. Advertising in newspapers and pulblic radio. 10. Cost of programs describing the work of Ansel Adams and Revenue (10,000 x $15) Less: $150,000 1 pictures at exhibition. Lease of photographs from other museums and ADDITIONAL INFORMATION collectors Packing and transportation $100,000 In preparing the budget, Alice assigned 25 percent of her and he assistants annual salaries to the exhibition since they will eadh of photographs from other 3 museums and collectors Event insurance Alice Morgan salary (25%) William Jacob salary (25%) Guard service Installation costs 5,000 4,000 15,000 13,000 spend approximately 3 months on the project. An admissonkeo 4 5 6 of $6 is charged to enter the museum, and attendance at bition is an additional $15 per person. Approximately one tith the individuals who are estimated to attend the exhibition would have come to the museum whether the exhibition was being or not. (Alternatively, four-fifths of the individuals are coming specifically to attend the exhibition.) 12,000 2,000 7,000 4,000 8 9 162,000 ($ 12,000) Analysis of prior data indicates that 20 percent make a purchase at the museum store, and the average 10 Exhibition printed programs Profit (loss) price is $8. The store has a 30 percent gross margin (sle Case 171 of sales) and profit (sales minus cost of sales minus staff sal- Does offering the exhibition appear to be a good decision from os and other operating costs) per dollar of sales of S percent. a financial standpoint REQUIRED Prepare an analysis of the financial impact of the exhibition or worse of financially)? b. How many people must attend the exhibition for its financial impact to be profit neutral (ie, the museum will not be better on the Rothmueller Museum, assuming attendance is 10,000
