performs London shows. The average show sells

1,430

tickets at

$55

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

50,

each earning a net average of

$350

per show. The cast is paid after each show. The other variable cost is a program-printing cost of

$11

per guest. Annual fixed costs total

$999,240.

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 $5,750,000. (Round contribution ratio to two decimal places.) Is this profit goal realistic? Give your reasoning.
4.	Prepare Green Productions' contribution margin income statement for 170 shows performed in the year. Report only two categories of costs: variable and fixed.

Question content area bottom

Part 1

Requirement 1. Compute revenue and variable costs for each show.

Select the formula and enter the amounts to compute sales revenue for each show.

Number of units sold		Variable costs per unit	=	Sales revenue per show
1430		55	=

Part 2

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 show

Cost of programs

=

Cost of performers

=

Total variable costs

Part 3

Requirement 2. Use the equation approach to compute the number of shows

Green Productions

must perform each year to break even.

First, select the formula to compute the required sales in units to break even.

-

-

=

Target profit

Part 4

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

.

Part 5

Requirement 3. Use the contribution margin ratio approach to compute the number of shows needed each year to earn a profit of

$5,750,000.

(Round contribution ratio to two decimal places.) 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

$5,750,000.

(Round the required sales in dollars to the nearest whole dollar. Round amounts in the formula to two decimal places, XX.XX. Abbreviation used: CM = contribution margin.)

(

+

)

=

Required sales in dollars

Part 6

(

+

)

%

=

Part 7

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

$5,750,000.

(Round your answer up to the nearest whole number.)

The number of shows needed annually to earn a profit of $5,750,000 is

.

Part 8

Is this profit goal realistic? Give your reasoning.

The profit goal of

$5,750,000

is

realistic

unrealistic

since

Green Productions

currently performs

170

shows a year.

Part 9

Requirement 4. Prepare

Green Productions'

contribution margin income statement for

170

shows performed in the year. Report only two categories of costs: variable and fixed.

Green Productions
Contribution Margin Income Statement
Year Ended December 31, 20XX
Operating Income (Loss)