Question 2 (18 Marks) The Weather Works Players are local theatre group that produce various plays and shows with weather related themes. You have been hired by the troupe to help determine if their next show, BRRRfooted, is economically viable. As the WWP are a not-for-profit, they are not subject to tax. The troupe has provided you with the following information with regards to their show Rights to the show $20,000 (cost for all shows) Stage Rental Costs $22,000 (all shows) + $19/ticket sold Insurance $3,300 (cost for all shows) Additional cost per ticket sold $6 Ticket price $35/person Requirements

a) How many total tickets do the WWP need to sell in order to breakeven on the show, what is the total revenue needed to earn in order to breakeven? (2 marks)

b) If WWP wish to make $18,000 on this show, how many tickets do they need to sell, what revenue do they need to earn? (2 marks)

c) The theatre that WWP perform in seats 500 people, assuming the theatre will always be 85% full, how shows do they need to perform in order to break even (2 mark)

d) WWP expects to generate $175,000 in total revenue, calculate the margin of safety in dollars, units (use $40/ticket) and percentage (2 marks)

e) Suppose WWP offer three different prices one for children, one for adults and one for seniors; at the following prices $15/children, $40/adults, $29/seniors. Through experience the WWP believe the audience at their shows will be 25% children and 30%, 45% seniors, assuming the sales mix will stay the same, how many tickets per group (Children, Adults, Seniors) do they need sell of each in order to make $10,000? (5 marks)

f) Assuming the above pricing (part d) if all tickets sold were to children, how many tickets need to be sold in order to breakeven? (1 mark)

g) Assuming the rights to the show ($20,000), insurance cost ($3,300) & additional variable cost ($6) remain the same. The WWP are considering different venues:

a. Venue A - Costs of $15,500 to rent + $22/ticket sold. As this venue is a higher quality venue, they believe they can charge $40/ticket.

b. Venue B - Costs $18,000 + $12/ ticket sold. At this venue they believe they can only charge $25/ticket

c. Venue C - $28/ ticket sold. They can charge $42/ticket.

Assuming each venue will generate 4,200 ticket sales, assuming all other costs are unchanged, which venue will generate the most operating income? (4 marks)