The day was a typical February wintery day in New England. Rehearsals for the upcoming play Kamala were in full swing inside two rented rooms of a church building in Belmont, Massachusetts. The actors were all present for the rehearsal despite a snow storm warning for the morning. The heat from the passionate and intense drama was riveting for the observers in the room, making the wintry day a little more palpable. But Jayanti, the actor portraying the lead female role as Sarita, had more on her mind than the powerful lines she had to deliver in the play and the heat in the room. She was concerned about the productions budget for the four shows planned for late-March. By the afternoon, bright sunshine made the threat of the snowstorm disappear and Jayantis memory drifted back to when they made the decision to produce Kamala. The Stage Ensemble Theater Unit, Inc. (SETU) just completed a successful production staging one of the Indian epics, The Ramayana, in the latter part of 2016. The success meant the company had a comfortable cash reserve, which emboldened Subrata Das, the director, to consider producing Kamala, a play that had special meaning for the company and for him and Jayanti. It was SETUs first production when the theater company was founded in 2003 and Subrata and Jayanti played the leading male and female roles. The play was in a contemporary setting with a strong social justice message, quite different from the historic epics that SETU had now become famous for. As a community theater company, historic epics with a large cast brought in more audience through personal connections and word of mouth. The healthy cash balance from The Ramayana and the relative lower production costs of contemporary play led Subrata to believe he could take the risk to reproduce Kamala in 2017. With the March opening only a month away, Jayanti knew she needed to get a clear picture of the budget and worked on getting members of SETU to focus on marketing, fundraising, and ticket sales so they would have a chance of breaking even.

About SETU

Several theater enthusiasts founded SETU (Stage Ensemble Theater Unit, Inc.) in 2003. As a community theater company, all positions were staffed by volunteers, each contributing their expertise and time. SETUs founders decided not to charge any membership fees for the participants. They made sure that SETU was incorporated from day one as they wanted to avoid the unlimited liability problem associated with partnerships. All of the founders were professionals such as college professors, tech entrepreneurs, physicians, and corporate managers. They also agreed to organize SETU as a not-for-profit entity as their mission was to bridge the culture gap between India and the Western world through the medium of theater (www.setu.us). One of the founders, Jayanti Bandyopadhyay, was an accounting professor at a local university and utilized her accounting knowledge to apply for section 501(c)(3) status and successfully received approval for operating as a not-for-profit entity from the Internal Revenue Service and the State of Massachusetts. To keep paperwork manageable for a volunteer staff, SETU decided to limit their annual gross receipts to be less than $50,000 so they could file the 990N tax form (Internal Revenue Service, 2016). By 2017 only two of the original founders, Jayanti and Subrata Das (a successful tech entrepreneur), remained with the company.

The founders made a firm commitment to perform plays from Indian history and current events in English so that the plays would be accessible to a wide audience. Using English was also more practical because India had a diverse body of languages with thirteen plus main languages and hundreds of dialects. Therefore, India uses English as the common language in majority of business dealings[1]. As finding well-written plays with Indian theme in English had not been an easy task, often the director or others had to translate plays written in one of the Indian languages into English. Their last play, The Ramayana, was a well-known Indian epic and the script was co-authored by nine members together. SETU had successfully operated for fifteen years and had built a good reputation in the Greater Boston area as a theater company introducing Indian culture while giving education and performance opportunities to passionate theater lovers, experienced and novice alike.

The Making of Kamala

The production to be staged at the end of March, Kamala, was originally written in the Indian language Marathi by a famous playwright Vijay Tendulkar in 1981 and then translated into English by Priya Adarkar in 1997. The play was inspired by a true story. Ashwin Sarin, a journalist for the newspaper Indian Express bought a girl from a rural flesh market and presented her at a press conference to expose such a malaise in modern society. Moved by this news story, Tendulkar skillfully created a play that exposed the dark side of a male dominated society. The main character, Jaisingh Jadav, was also an investigative journalist but Tendulkar wanted him to be more complex, not a flawless hero. Tendulkar portrayed Jaisingh Jadavs behavior toward his wife Sarita as no better than treating a woman like a slave. The story showed the parallels of a poor village woman sold away in the slave trade and a so-called happy housewife married to a self-serving journalist, both finding themselves on the common platform of sexual slavery in a male-dominated world (Dhimate, 2016). Vijay Tendulkar visited Boston in 2002. The cast and crew met him for a discussion and contributed a sizeable amount to the playwright and obtained his permission to stage the play in 2003, which was SETUs first production as a theater company.

Pre-production

The Director, Subrata Das, had been in touch with Tanuja Mohite, Vijay Tendulkars daughter, through email for obtaining permission to stage the play again in 2017. Tanuja indicated that the royalty fee would be Rupees or INR 2000 per show. Subrata agreed to pay INR 12,000 in anticipation of six shows for the current production. Given the exchange rates between US Dollar and Indian Rupee between January and March 2017[2], INR 12,000 plus bank fees for the money transfer would total about US$200, which appeared reasonable for royalty fee. He decided to embed several music and dance pieces in the script because he wanted to create an added culture-specific appeal, especially in line with the well-known reputation of song- and dance-studded Bollywood movies. Including the dancers, the play had a cast of thirteen people and approximately five more people in the crew for stage management, make up, music and light operation. Jayanti felt that everyone was passionate about acting and being on stage but no one was thinking about the budget for the production. She decided to pin down her longtime friend Subrata, the director, in a phone conversation about the preparation of a detailed budget. She asked him to allot at least forty-five minutes for this conversation.

Jayanti and Subrata were the two SETU members with check signing authority and electronic access to SETUs checking account at Citizens Bank. The account required a minimum balance of $2,000 at all times to avoid check writing fees. Both founders agreed that $2,000 was also a good amount as the prudent reserve and should not be used to cover expenses of future productions. As of February 1, 2017, the checking account had a balance of $9,525.32 from previous production receipts over expenditures. Therefore, $7,525.32 was available for future productions. Subrata felt confident that with SETUs established reputation in the Boston area, assuring a full house for each show should not be difficult. The balance in the checking account might have provided a further sense of security that might not be true. Jayanti was more cautious.

After looking at various options, the Mosesian Center for the Arts Black Box Theater in Watertown seemed best. It was in close proximity to Subratas residence as he would have to run back and forth frequently during the days of the performances. He had negotiated a price of $1,630 (subject to change up or downward see Exhibit 2) for the use of the space for the weekend of March 31, April 1 and 2 and for March 30 for setting up the stage and a dress rehearsal. The managers and tech support fees were estimated and included in that price with minimum fees specified in the contract (see Exhibit 2). SETUs certificate of liability insurance annual coverage was valid until June 30, 2017 (see Exhibit 3) satisfying a requirement for the contract with Mosesian Center for the Arts.

While no additional fee would be necessary for lighting, the sound system did not suffice at the theater and additional equipment would have to be rented. Subrata had checked prices for sound system rental and for operating. A local entrepreneur was willing to rent it for $300 in total. Past experience taught them to be cautious when budgeting for lighting and sound equipment, they allocated additional $200 in the budget for miscellaneous sound and lighting expenses.

The group was using a church for the weekly Sunday rehearsals. Subrata informed Jayanti that the church did not expect any payment but would appreciate a donation. If the place would be used every Sunday for two months for rehearsals, $300 donation seemed appropriate in Subratas opinion. Jayanti reminded Subrata that while the amount seemed reasonable, the classification could not be a donation as SETU itself was a not-for-profit organization. The amount should be considered rent to be paid.

The set for Kamala was modest compared to a historic epic. It required a living room set up for an upper-middle class household of a journalist. Several of the cast members agreed to lend their own furniture, wall hangings, and other props for the play. If these items were to be rented, a minimum cost of $200 would be incurred. One of the cast members who owned a small stage decorating business took charge of the stage decoration and volunteered her services which would cost at least $500 if SETU had to pay. Jayanti looked into renting a van for hauling the furniture to and from the venue. The cost of renting the van appeared to be at least $500. In conversations with her sister, Jayanti was very thankful that she was willing to volunteer to drive her truck back and forth to haul the furniture, thus saving the van rental cost. The costumes for this play were not as elaborate or unique as in past productions. Jayanti checked and found out that make-up materials leftover from past productions were sufficient for this production and any new materials would be taken care of by each cast member.

Promotion and Marketing

Next the discussion revolved around possible sources of funds. Since SETU did not charge membership fees the major source of funds had always been from ticket sales. As the play was about a current social concern in the Indian subcontinent, both Subrata and Jayanti realized that majority of the audience would most likely be from the Indian-origin population in the Greater Boston area. Nonetheless, they dreamt of having a full house including non-Indian audience. They knew that promotion would be needed to reach a wider group. Several local e-news magazines such as India New England News ($150 negotiated fee), The Foundations TV ($150 negotiated), and Lokvani ($60) were options to consider. These e-magazines would carry weekly ads to promote the Kamala play for three months on their pages. The Foundations TV would post clips of rehearsals and interviews with cast members on its Facebook page. India New England News agreed to publish an article about the upcoming production during the week before the performances. A total of $360 was the budget for these organizations. While Jayanti was getting concerned with the perceived ever-increasing costs, she realized that marketing and promotion would have to be an integral and crucial part of this production. A professional graphic artist among the SETU group volunteered to create a theatrical poster for Kamala (see Exhibit 1). Such creative work would have cost $500 at a minimum if SETU had to pay for those services. Even with donated artwork, the printing costs of posters and playbills were estimated to total $150. While on the subject of promotion and marketing Subrata casually mentioned that he was thinking of getting on social media for SETU. The idea had instant appeal. Jayanti, the ever-vigilant accountant added, I think this is a great idea, but which social media and how? Subrata said that SETU had a large number of connections with past patrons on its Facebook page and these people could be part of the network and their friends would also get pulled in. This network of friends, patrons, and theater enthusiasts could increase and sustain public interest in SETU and its productions through social media. Plus, there was no cost associated with it.

Subrata commissioned three of the cast members to be continuously active on various social media outlets. All of them were professionals with full-time jobs but agreed to volunteer their service to market SETUs production. Their voluntary service for this production was estimated to be equivalent to $300 if an outside consultant had to be hired, even for a not-for-profit organization. Jayanti had always provided her accounting and bookkeeping expertise for SETU on a voluntary basis. She jokingly reminded Subrata that SETU was saving at least $300 in bookkeeping cost even for simple bookkeeping.

Even though ticket sales would likely always be the main source of fund, Jayanti and Subrata agreed on one aspect; SETU had to look for alternative sources to cover the expenses necessary for a production like Kamala. They had good reason to hope for sponsorships and advertising spaces for this play as the story had universal appeal. During the past production of the epic Ramayana, one cast member (a psychologist by profession) helped raise $2,500 from her network. This fundraising effort was the best one in SETUs history because Ramayana was a well-known and well-loved story. Jayanti and Subrata hoped for $200 in cash sponsorship from the same network for the smaller Kamala production. In the past, at other theater venues, selling Indian snacks such as samosas brought in extra funds. However, new rules at the Black Box prohibited selling food items as the management had their own concession stand though they allowed free promotional snack items for the audience. Subrata and Jayanti decided to offer samosas to the audience for free to enhance an Indian cultural experience. A cast member was able to negotiate a fixed price of $275 with a local Indian restaurant for providing samosas on all three days. Traditionally, SETU provided light sandwiches for the cast and crew during performance days. Subratas wife Janique had a very good relationship with the owner of Russo Farms through her bakery delivery business. Russo Farms agreed to donate $300 worth of sandwiches and vegetable platter for cast and crew during the performance days.

Making the Numbers Work

After completing the conversation with Subrata, Jayanti decided to prepare the budget on a Microsoft Excel spreadsheet. She wanted to estimate how many tickets were needed to cover all the known costs. The Black Box Theater could accommodate a maximum of 90 people per show. While optimism reigned supreme, the reality was that SETU had never had a full house for each show. The ticket price was set at $20 for adults and $15 for students and seniors, plus $5 fee per ticket to be paid to the Black Box for set up and commission. These prices appeared to be reasonable in comparison with similar entertainment events in the Indian-origin community.

Based on historical data from previous productions, Jayanti decided to use $17 per ticket as an average conservative estimate. She did not include the $5 fee in this estimate because the Black Box management would deduct that fee directly before any payout to SETU. She would have to send an email to all SETU members explaining the budget and why everyones effort in selling the number of tickets necessary to cover those costs was crucial. She knew that her task was difficult as the majority of the actors and artists were not necessarily thinking of the business side of the production, especially because SETU was a not-for-profit organization.

From a financial perspective, keeping costs under control was a key factor. In addition to detailing actual cash costs, she thought members would also appreciate knowing the contributed value of volunteers which helped keep costs low. Knowing the minimum number of tickets needed to breakeven would enable her to be proactive if ticket sales did not meet projection. That information would also motivate each member to promote the play on individual personal Facebook pages and invite friends and families to attend. Fifteen years of production experience also meant that Jayanti and Subrata knew things might not always go as planned, from cost overrun to show cancellations due to weather. Jayanti focused on the spreadsheet and considered various scenarios.

Case Questions:

1) Use the information provided above to prepare a Budgeted Income Statement. Have two main sections titled Receipts and Expenditures. Within the sections, make sure to have sub- categories so that actual costs could be compared with budget subsequently. Proper accounting format with currency should be used.

2} Using the budget prepared in 1:

a) Identify each cost as variable or fixed in relation to tickets sold.

b) In the first case, assume that all funds are to come from ticket sales only and that there are four shows in total. Compute the break-even point in number of tickets to be sold and in dollars.

c) In the second case, assume the same in a) but only three shows in total. Compute the break-even point in number of tickets to be sold and in dollars.

d) In the third case, assume that SETU would receive sponsorship funds in addition to ticket sales for four shows. Compute the break-even point in number of tickets to be sold and in dollars.

e) In the fourth case, assume that SETU would receive sponsorship funds in addition to ticket sales for three shows. Compute the break-even point in number of tickets to be sold and in dollars.

f) Comment on the feasibility of the required number of ticket sales computed from above, keeping in mind the nature of the play, that it is staged by a community theater organization, and the ethnicity aspect. Provide suggestions to the group about ways to achieve the necessary amount of ticket sales.

3) Evaluate the importance of opportunity cost:

a) Define opportunity costs.

b) Identify and provide the approximate value of resources that were donated by actors and patrons.

c) Incorporate these opportunity costs and measure its impact on the budgeted income stated in question 1 and the breakeven numbers calculated in question 2.

4) Extra Question: In light of the added opportunity costs discussed above, what price would SETU have to charge to breakeven for this production if they had to pay for all donated services, assuming they could reach (a) 60% capacity, (b) 80% capacity, (c) 90% capacity

R1.dll 73%. 3:26 PM Template for SETU_Kamala Case_811192417.xlsx Sheet1 SETU Stage Ensemble Theater Unit, Inc. Template for students Kamala-Mosesian Center for the Arts Black Box-March 31, April 1, 2, 2017 Budgeted Receipts for March 31 April 2 production: RECEIPTS Black Box, net of fee TOTAL Budget Budget EXPENDITURE Blackbox Theater Rental Fee for Manager and Tech Support Rental for rehearsal Stage Decoration and Transportation of decor At the Door Ticket sale Cash Check TOTAL Brochures etc. Printing Publicity for various ads, intrviews, FB ads, etc Makeup etec Food during three performances and four final rehearsals Copyright payment to playwright in Indian Rupees conwerted to USD Other (misc.) Snacks and Table Sale Less: food cost TOTAL CASH DONATIONS TOTAL TOTAL BUDGETED RECEIPTS TOTAL BUDGETED EXPENDITURES TOTAL BUDGETED EXPENDITURES IF OPPORTUNITY COSTS WERE INCLUDED 23 24 25 26 28