Famous Productions performs London shows. The average show sells 1,300 tickets at $60 per ticket. There are 170 shows per year. There are 170 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. 1. Compute revenue and variable costs for each show. 2. Use the equation approach to compute the number of shows Famous 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 Famous Productions's contribution margin income statement for 170 shows performed in 2018. Report only two categories of costs: variable and fixed. Famous Productions performs London shows. The average show sells 1,300 tickets at $60 per ticket. There are 170 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 Requirement 1. Compute revenue and variable costs for each show. Select the formula and enter the amounts to compute sales revenue for each show. Net sales revenue per unit x Number of units sold = Sales revenue per show X 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 unit x Number of units = Variable costs per show Cost of programs Cost of performers X Total variable costs Requirement 2. Use the equation approach to compute the number of shows Famous Productions must perform each year to break even. First, select the formula to compute the required sales in units to break even. Net sales revenue Variable costs Fixed costs 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. contribution margin.) (Fixed costs + Target profit)/ CM ratio = Required sales in dollars V % = 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. 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 realistic since Famous Productions currently performs 170 shows a year. Requirement 4. Prepare Famous Productions's contribution margin income statement for 170 shows performed Famous Productions Contribution Margin Income Statement Year Ended December 31, 2018 Sales Revenue Variable Costs Contribution Margin Fixed Costs Operating Income (Loss)
