• Shelley, Jonathan, and Adrian Stein, the Fundraising Chairperson, are beginning to make plans for next year's rodeo. Shelley believes by negotiating with local feed stores, inn- keepers, and other business owners, costs can be cut dramatically. Jonathan agrees. After carefully analyzing costs, Jonathan has estimated the fixed expenses can be pared to approximately $51,000. In addition, Jonathan estimates variable costs are 4% of total gross receipts. After talking with business owners who attended the rodeo, Adrian is confident the funds solicited from sponsors will increase. Adrian is comfortable in budgeting revenue from sponsors at $25,600. The local youth group is unwilling to provide concessions to the audience unless they receive all of the profits. Not having the personnel to staff the concession booth, members of the Circular Club reluctantly agree to let the youth group have 100% of the profits from the concessions. In addition, members of the rodeo committee, recognizing the net income from programs was only $100, decide not to sell rodeo programs next year.
• Compute the break-even point in dollars of ticket sales assuming Adrian and Jonathan are correct in their assumptions.
• Shelley has just learned you are calculating the break-even point in dollars of ticket sales. She is still convinced the Club can make a profit using the assumptions above (second bullet point above).
• Calculate the dollars of ticket sales needed to earn a target profit of $6,000.
• Calculate the dollars of ticket sales needed to earn a target profit of $12,000.
• Are the facilities at the fairgrounds adequate to handle crowds needed to generate ticket revenues calculated above (third bullet point above) to earn a $6,000 profit? Show calculations to support your answers.