The Childrens Theatre The Childrens Theatre is a nonprofit organization devoted to staging plays for children. The theater has a very small full-time professional administrative staff. Through a special arrangement with the actors union, actors and directors rehearse without pay and are paid only for actual performances. The Childrens Theatre had tentatively planned to put on six different productions with a total of 108 performances. For example, one of the productions was The Lion King, which had a sixweek run with three performances on each weekend. The costs from the current years planning budget appear below.

The Childrens Theatre Costs from the Planning Budget For the Year Ended December 31
Budgeted number of productions	6
Budgeted number of performances	108
Actors and directors wages	$ 216,000
Stagehands wages	32,400
Ticket booth personnel and ushers wages	16,200
Scenery, costumes, and props	108,000
Theater hall rent	54,000
Printed programs	27,000
Publicity	12,000
Administrative expenses	43,200
Total	$ 508,800

Some of the costs vary with the number of productions, some with the number of performances, and some are fixed and depend on neither the number of productions nor the number of performances. The costs of scenery, costumes, props, and publicity vary with the number of productions. It doesnt make any difference how many times The Lion King is performed, the cost of the scenery is the same. Likewise, the cost of publicizing a play with posters and radio commercials is the same whether there are 10, 20, or 30 performances of the play. On the other hand, the wages of the actors, directors, stagehands, ticket booth personnel, and ushers vary with the number of performances. The greater the number of performances, the higher the wage costs will be. Similarly, the costs of renting the hall and printing the programs will vary with the number of performances. Administrative expenses are more difficult to analyze, but the best estimate is that approximately 75% of the budgeted costs are fixed, 15% depend on the number of productions staged, and the remaining 10% depend on the number of performances.

The theatre company is considering charging $50 per ticket, which will maximize attendance at 140 attendees per performance. The theatre company is also considering charging $60 per ticket, however attendance is expected to decrease by 16% if it increases the pricing. This pricing calculation is predicated on six productions and 108 performances.

After consideration, the board of directors of the theater is considering expanding the theaters program to seven productions and a total of 168 performances.

If the theatre company puts on 7 productions and 168 performances, the expected number of attendees per performance will decrease, if the price structure is kept the same as 6 productions and 108 performances.

If producing 7 productions and 168 performances, $60 per ticket is expected to draw on average 98 attendees per performance. The theatre company is also considering charging $50 per ticket, which will increase attendance on average 22% over the $60 ticket price.

The Childrens Theatre company has asked for your expertise to help determine the level of production to pursue.

3. Prepare four budgeted income statements, one for each level of production at a given price structure.

4. Which performance and ticket price structure would you advise the Childrens Theatre Company to utilize?

5. Following your meeting, the Childrens Theatre Company has decided to produce 7 shows and 168 productions. The revenue budgets were exactly correct. At the end of the year actual costs appear below:

The Childrens Theatre Actual Costs For the Year Ended December 31
Actual number of productions	7
Actual number of performances	168
Actors and directors wages	$ 341,800
Stagehands wages	49,700
Ticket booth personnel and ushers wages	25,900
Scenery, costumes, and props	130,600
Theater hall rent	78,000
Printed programs	38,300
Publicity	15,100
Administrative expenses	47,500
Total	$ 726,900

6. Prepare two income statements, one for each pricing schedule and production costs at 7 productions and 168 performances. Did your recommendation work out?