Green Productions performs London shows. The average show sells 1,300 tickets at $60 per ticket. There are 175 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 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 equation approach to compute the number of shows Green 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 Green Productions contribution margin income statement for 175 shows performed in 2016. Report only two categories of costs: variable and fixed.

NetSalesRevenue-VariableCosts-FixedCosts=Targetprofit \begin{tabular}{|c|c|c|c|c|c|c|c|} \hline A & B & C & D & E & F & G & H \\ \hline Earn a profit of $5,687,500 & & & & \\ \hline \end{tabular} Contribution Margin Ratio Contribution Margin Ratio = Contribution Margin / Net Sales Revenue Contribution Margin = Net Sales Revenue - Variable Costs Net Sales Revenue Variable Costs Contribution Margin Ratio Required Sales in Dollars Required Sales in Dollars = Fixed Costs + Target Profit / Contribution Margin Ratio Fixed Costs Target Profit Required Sales in Dollars Requires Sales in Units Required Sales in Units = Required Sales in Dollars / Sales Price Per Show Requires Sales in Units Shows A Green Productions Contribution Margin Income Statement For the Year Ending December 31, 2016 Sales Revenue Variable Costs Contribution Margin Fixed Costs Operating Income