REQUIRED

How would you describe the competitive strategy of the ALLTEL Pavilion? Given the firm's strategy, what are the critical success factors for the Pavilion to achieve its goal of continuous annual growth in operating income?

Complete two selected cost$-$volume$-$profit analyses for the show illustrated in Exhibit $2,$ the KFBSAllstars:

a$)$ How many tickets must the ALLTEL Pavilion sell to break even?

b$)$ How many tickets must ALLTEL sell to earn $$30,000$ operating income after taxes, assuming a $40$ percent tax rate?

What should be the average ticket price for the KFBS concert if the fixed$-$pay fee is $$200,000$ and the Pavilion expects to sell $7,000$ tickets and wants to earn $$30,000$ after $40$ percent in taxes?

Negotiating the fee for the KFBS Allstars: fixed$-$pay or per capita contracts?

a$)$ What is the maximum fixed fee that the Pavilion can pay the KFBS Allstars if the Pavilion wants to earn $$45,000$ after $40$ percent tax and expects the show to have an average ticket price of $$22\mathrm{.}12?$ Assume the show is expected to draw $6,000$ paying ticket holders.

b$)$ What is the maximum fixed fee that the Pavilion can pay the KFBS Allstars if the Pavilion wants to earn $$45,000$ after $40$ percent tax and expects the show to have an average ticket price of $$22\mathrm{.}12?$ Assume, including $25$ percent comp tickets, the show is expected to be a sell$-$out.

c$)$ Independent of $($a$)$ and $($b$),$ what is the maximum per capita fee that the Pavilion can pay the KFBS Allstars, whose concert is expected to be a sellout, if the Pavilion wants to earn $$180,000$ after $40$ percent tax from an average ticket price of $$22\mathrm{.}12$ per ticket?

What role does CVP analysis and operating leverage play in contract negotiations with different types of performers $($fixed$-$fee or per capita$)?$

Issues in Accounting Education, November $2004$