Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Rothmueller Museum In 1928, Francis Rothmueller, a Northwest railroad magnate, established an endowment to fund the Rothmueller Museum in Toronto. The museum currently has a

Rothmueller Museum

In 1928, Francis Rothmueller, a Northwest railroad magnate, established an endowment to fund the Rothmueller Museum in Toronto. The museum currently has a $30 million endowment, but it also has substantial operating cost and continues to add to its eclectic collection that encompasses paintings, photographs, drawings, and design objects post 1900.

Annual earnings from the endowment (about $2.5 million in 2016) are not sufficient to cover operations and acquisitions and the museums trustees and president are conscious of the need to generate income from admissions, special exhibits, and museum store sales.

Alice Morgan, photographic curator, is in the process of planning an exhibition of Tommy Thomson photographs that will run from September through November 2017. Below is preliminary budget, prepared by Alice, of revenue and costs association with the exhibition.

Revenue: (10,000 @ $15 per ticket) $150,000 a)

Less:

Lease of photographs from other museums and collectors $100,000 b)

Packing and transportation of photographs from other

Museums and collectors 5,000 c)

Event insurance 4,000 d)

Alice Morgan salary (25% allocated to this exhibition) 15,000 e)

William Jacob salary (25% allocated to this exhibition) 13,000 f)

Guard service 12,000 g)

Installation costs 2,000 h)

Advertising 7,000 i)

Exhibition printed programs 4,000 j)

Total costs $162,000

Projected profit/(loss) (12,000)

  1. Estimated attendance is 10,000 and admission is $15/ticket
  2. Some photographs will come from the Rothmueller collection while others will be leased from other museums and collectors.
  3. Cost of packing and transportation to and from Rothmueller.
  4. Insurance to cover photographs during the run of the exhibition.
  5. 25% of annual salary for Alice Morgan, head photography curator.
  6. 25% of annual salary for William Jacob, assistant photography curator.
  7. Cost of guard service for the exhibition.
  8. Painting of exhibition room to off-white background.
  9. Advertising in newspapers and public radio.
  10. Cost of programs describing the work of Ansel Adams and pictures at exhibition.

Additional Information

In preparing the budget, Alice assigned 25% of her salary and her assistants annual salaries to the exhibition since they will each spend approximately 3 months on the project. An admission fee of $6 is charged to enter the museum, and attendance at the exhibition is an additional $15 per person. About one-fifth of the individuals who are estimated to attend the exhibition would have come to the museum whether the exhibition was being held or not. (Alternatively, four-fifths of the individuals are coming specifically to attend the exhibition).

Analysis of prior data indicates that 20% of individuals make a purchase at the museum store, and the average purchase price is $8. The store has a 30% gross margin (sales minus cost of sales) and profit (sales minus cost of sales minus staff salaries and other operating costs) per dollar of sales of 5%.

  1. Prepare an analysis of the financial impact of the exhibition on the Rothmuellar, assuming attendance of 10,000. Does offering the exhibition appear to be a good decision from a financial standpoint?

  1. How many people must attend the exhibition for its financial impact to be profit neutral (i.e., the museum will not be better or worse financially)?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Changing Face Of American BankingDeregulation, Reregulation, And The Global Financial System

Authors: Ranajoy Ray Chaudhuri

3rd Edition

1137365811, 9781137365811

More Books

Students also viewed these Accounting questions

Question

1 . 2 Identify the benefits and drawbacks of using VR helmets.

Answered: 1 week ago

Question

What is the purpose of the Occupational Safety and Health Act?

Answered: 1 week ago

Question

Discuss globalization issues for small to medium-sized businesses.

Answered: 1 week ago