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part 3 PROBLEM SET #12: CVP Analysis Problem A: The Accounting Society at So. Cal. University is planning its annual fundraising extravaganza, the Bean Counter's
part 3
PROBLEM SET #12: CVP Analysis Problem A: The Accounting Society at So. Cal. University is planning its annual fundraising extravaganza, the Bean Counter's Ball. The AS expects to charge $100 per ticket. The following projected costs were culled from last year's ball [with 200 attendees) and updated to reflect current costs: 1 Prime Rib Dinners 2 Party Favors 3 Programs 4 Orchestra 5 Advertising 6 Commemorative Tickets 7 Beverly Wilshire Ballroom Rent 8 Dinner Time Entertainment Total Unit 6,000 30.00 400 2.00 600 3.00 4,000 20.00 1,000 5.00 500 2.50 10,000 50.00 2.500 12.50 Costs - 1,2,3: These costs have been obtained using competitive bids based on number ordered Each requires a minimum order of 150 and the actual number must be communicated to vendors 5 days prior to the event. Costs - 4.7.8: These costs are fixed fee and must be booked for in advance. Costs - 6: Tickets are purchased in a block and include this year's date, theme, unique design, and logo Required: 1. Use the information above to prepare a contribution approach income statement 2. Use the information in #1 to calculate the following: a. Break-even in tickets and sales dollars. b. Net income if-150, 250, or 300 were sold. c. Number of tickets that must be sold in order to earn - $10,000 $25,000, 550,000 d. Assume 200 attendees, calculate price per ticket to eam - $10,000, $25,000, 850,000 3. The Dance committee is very concerned given your analysis and has proposed the following changes in attempt to increase the profitability of the Ball: Instead of individual dinners, a delicious buffet will be catered by Chano's Fine Foods. Costs will be $1,000 for attendance of 200-300, 51,500 for 301 to 400 patrons, $2,000 for 401 to 500 patrons, and a $500 for cach increase of 100 patrons.. Party favors will be eliminated and programs will copied at Kinko's at a cost of $1 cach. The orchestra and dinner entertainment will be replaced by Tito's Party Time DJ. Projected cost $200. Since his parents are on vacation, Ron has offered to host the Ball at their house for a nominal gratuity of $500. All other costs will remain the same. The costs of tickets will be reduced to $30 each and 350 people are expected to attend. a. Prepare a new contribution approach income statement. b. Calculate the new break-even in tickets and sales dollars. c. Calculate profits if - 300, or 450 people attended. d. Assuming 350 attendees, calculate ticket price to earn $20,000 and $50,000 Step by Step Solution
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