Extreme Theme

PART ONE:Refer to the following information to complete an income statement in contribution margin format for this tourist attraction.

The customer

The attraction has four types of customers. Full-price, member, promotional discount, and complimentary.

Prices

Full-price19.95

Discount20% off

MemberTwice the price but visit an average of 5 times per year

CompSome visitors come in on a complimentary ticket

Attendance

Total annual attendance is 1 million people. Only 15% pay full price and 15% get in for free. In the year of operation, the attraction will sell 40,000 annual passes (remember each pass is equal to 5 visits). The rest of the attendance comes in on a promotion.

(Hint: Determine the attendance and revenue for each customer type. Total the revenues and divide by 1 million to determine the average price paid by all visitors - call the gate per cap. The trickiest part is for the members - determine attendance, but use the # of passes multiplied by the pass price to determine revenue for this customer type)

Other revenue

The food sold at the attraction brings in $10 per cap and has a 30% cost of sales.

Expenses

Labor is 100 salaried people at $40,000 each.

Hourly labor - labor hours per attendee is .80. Use this to compute hourly labor hours. The average hourly rate is $10 per hour.

Operating expenses are $500,000 fixed and $2 per cap variable. Marketing costs are $100,000 for the first 500,000 visitors and $1 per cap after that.

DT&I (Depreciation, taxes and insurance) is $1 million per year.

PART TWO:

1. Calculate the average price (per cap) for admissions.

1. Determine the breakeven # of attendees (Hint: divide contribution margin by 1 million visitors to determine CM).