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England Productions performs London shows. The average show sells 1,300 tickets at $60 per ticket. There are 150 shows a year. No additional shows can
England Productions performs London shows. The average show sells 1,300 tickets at $60 per ticket. There are 150 shows a 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. | ||||||||||||||||
Requirements: | ||||||||||||||||
1. Compute revenue and variable costs for each show. | ||||||||||||||||
2. Use the income statement equation approach to compute the number of shows England Productions must perform each year to break even. | ||||||||||||||||
3. Use the contribution margin 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 England Productions' contribution margin income statement for 150 shows performed in 2012. Report only two categories of costs: variable and fixed. |
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