Solution for introduction to managerial accounting Brewer, Garrison, and Noreen 7e chapter 5 teamwork in action LO5-1, LO5-4 Revenue from major intercollegiate sports is an important source of funds for many colleges. Most of the cost putting on a football or basketball game may be fixed and may increase very little as the size of the crowd increases. Thus, the revenue from every extra ticket sold may be almost pure profit. Choose a sport played at college and answer the following: I selected basketball 1. What is the maximum seating capacity of arena in which the sport is played? Answer is 1200 seats which 300 are student seats at 5 dollars a ticket and 900 are adult seats at 8 dollars a ticket. During the past year, what was the average attendance at the games? Answer 840 attended 300 students and 540 adults. What percentage of arena was filled? Answer 70% 2. The number of seats sold often depend on the opponent. The attendance for a game with a traditional rival is usually above the average. Also games against conference foes may draw larger crowds than other games. As a consequence, the number of tickets sold for a game is somewhat predictable. What implications does this have for the nature of the cost of putting on a game? Answer: Not much, this school does not have the traditional competitive behavior as other larger schools seem to have within their sporting programs Are most of the cost really fixed with respect to the number of tickets sold? Answer: 3. Estimate the variable cost of per ticket sold. Answer: 4. Estimate the total additional revenue that would be generated in an average game if all the tickets were sold at their normal price. Answer: Estimate how much profit is lost because these tickets are not sold. Answer: 5. Estimate the ancillary revenue (parking, and concessions) per ticket sold. Answer: Estimate how much profit is lost in an average game from these sources of revenue as a consequence of not having a sold-out game. Answer: 6. Estimate how much additional profit would be generated for your college if every game were sold out for the entire season? Answer: