Question
Complete the following two cost-volume-profit analyses for the show illustrated in Exhibit 2, the KFBS Allstars: a. How many tickets must Walnut Creek sell to
Complete the following two cost-volume-profit analyses for the show illustrated in Exhibit 2, the KFBS Allstars: a. How many tickets must Walnut Creek sell to break even? (Hint: don't ignore the possibility that the attendance of Comp ticket holders affects the concert's profitability). Be sure to SHOW YOUR CALCULATIONS. i. Do you think that it is likely that Walnut Creek will break even? Briefly explain. ii. Given your estimated breakeven point in units, compute the Margin of Safety (MOS) in units. Briefly comment on the MOS result. b. How many tickets must Walnut Creek sell to earn $30,000 operating income after taxes, assuming a 40 percent tax rate? Is it reasonable to assume this level of operating income will be achieved? Be sure to SHOW YOUR CALCULATIONS. Briefly explain.
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