Question
The customer The attraction has four types of customers. Full-price, member, promotional discount, and complimentary. Prices Full-price 19.95 Discount 20% off Member Twice the price
The customer
The attraction has four types of customers. Full-price, member, promotional discount, and complimentary.
Prices
Full-price 19.95
Discount 20% off
Member Twice the price but visit an average of 5 times per year
Comp Some visitors come in on a complimentary ticket
Attendance
Total annual attendance is 1 million people. Only 15% pay full price and 15% get in for free. In the year of operation, the attraction will sell 40,000 annual passes (remember each pass is equal to 5 visits). The rest of the attendance comes in on a promotion.
(Hint: Determine the attendance and revenue for each customer type. Total the revenues and divide by 1 million to determine the average price paid by all visitors call the gate per cap. The trickiest part is for the members determine attendance, but use the # of passes multiplied by the pass price to determine revenue for this customer type)
Other revenue
The food sold at the attraction brings in $10 per cap and has a 30% cost of sales.
Expenses
Labor is 100 salaried people at $40,000 each.
Hourly labor labor hours per attendee is .80. Use this to compute hourly labor hours. The average hourly rate is $10 per hour.
Operating expenses are $500,000 fixed and $2 per cap variable. Marketing costs are $100,000 for the first 500,000 visitors and $1 per cap after that.
DT&I (Depreciation, taxes and insurance) is $1 million per year.
PART TWO:
- Calculate the average price (per cap) for admissions.
- Determine the breakeven # of attendees (Hint: divide contribution margin by 1 million visitors to determine CM).
Suggestion for determining the gate revenue section of the income statement
- Remember quantity x price = revenue
- Quantity is called attendance in the theme park industry
- Selling price is called per cap (per capita means per head)
Create a revenue table that looks something like this
Type of Ticket | Attendance | Admissions Per Cap | Revenue |
|
|
|
|
Full Price |
|
|
|
Discount |
|
|
|
Member |
|
|
|
Comp |
|
|
|
Total | 1,000,000 |
|
|
Hint: The check figure is 12.57 for total admissions per cap
This is also total revenue divided by 1 million
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