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Amazing Productions performs London shows. The average show sells 1,300 tickets at $60 per ticket. There are 145 shows per year. No additional shows can be held as the theater is also used by other production companies. The average show has a cast of 65, each earning a net average of $340 per show. The cast is paid after each show. The other variable cost is a program-printing cost of $8 per guest. Annual fixed costs total $728,000. Read the requirements. 1. Compute revenue and variable costs for each show. 2. Use the equation approach to compute the number of shows Amazing Productions must perform each year to break even. 3. Use the contribution margin ratio approach to compute the number of shows needed each year to earn a profit of $5,687,500. Is this profit goal realistic? Give your reasoning. 4. Prepare Amazing Productions's contribution margin income statement for 145 shows performed in 2018. Report only two categories of costs: variable and fixed. Requirement 1. Compute revenue and variable costs for each show. Select the formula and enter the amounts to compute sales revenue for each show. x = Sales revenue per show Select the formula and enter the amounts to compute variable costs for each show. Compute the variable costs per show for each cost separately, and then compute the total variable costs per show. Variable costs per show Cost of programs Cost of performers = Total variable costs Requirement 2. Use the equation approach to compute the number of shows Amazing Productions must perform each year to break even. First, select the formula to compute the required sales in units to break even. Target profit Rearrange the formula you determined above and compute the required number of shows to break even. The number of shows needed annually to break even is Requirement 3. Use the contribution margin ratio approach to compute the number of shows needed each year to earn a profit of $5,687,500. Is this profit goal realistic? Give your reasoning. Begin by showing the formula and then entering the amounts to calculate the required sales dollars to earn a profit of $5,687,500. (Round the required sales in dollars to the nearest whole dollar. Round amounts in the formula to two decimal places, XX.XX. Abbreviation used: CM = contribution margin.) + = Required sales in dollars + % = Now use the information given and the required sales in dollars computed in the previous step to determine the required number of shows needed each year to earn a profit of $5,687,500. (Round your answer up to the nearest whole number.) The number of shows needed annually to earn a profit of $5,687,500 is Is this profit goal realistic? Give your reasoning. The profit goal of $5,687,500 is since Amazing Productions currently performs 145 shows a year. Requirement 4. Prepare Amazing Productions's contribution margin income statement for 145 shows performed in 2018. Report only two categories of costs: variable and fixed. Amazing Productions Contribution Margin Income Statement Year Ended December 31, 2018 Operating Income (Loss)
