Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Warsaw Air Show A group of community enthusiasts think that an air show would be a positive event for Warsaw, Indiana and greater Kosciusko

The Warsaw Air Show

A group of community enthusiasts think that an air show would be a positive event for Warsaw, Indiana and greater Kosciusko County. The goal was an annual air show that would improve with each passing year and add value to the community. Financially, the objective was to break even in the first year and earn $10,000 in the second year. Once up and running, the goal was to earn an average of $25,000 per year. The annual surpluses would be available to reinvest in the air show and support other community activities.

The original group of enthusiasts added strategically to their number and formed an air show committee. The committee quickly determined that 1) appearance fees would be necessary to attract desirable aircraft, 2) parking and entry fees would be insufficient to cover the air show costs, and 3) thus, funds would have to be raised through sponsorships. Sponsorship levels were set at $100, $1,000, $2,000 and $5,000.

A local civic group agreed to provide concessions. Profits from the concessions will be split evenly between the air show and civic group.

The air show will take place on the third weekend in August, starting on Friday evening and ending on Sunday afternoon. Entry fees are $10 for adults and $5 for children 12-and-younger. Parking fees are $5 per vehicle.

During the first year of the air show attendance and parking were as follows:

Vehicles Parked

Adult Admissions

Children Admissions

Friday

800

1,000

225

Saturday

1,750

2,450

1,100

Sunday

625

775

180

Total

3,175

4,225

1,505

Below are revenue and expense figures for the first year of the air show:

Revenues

Sponsor contributions

$30,000

Parking fees

15,875

Entry fees

49,775

Concessions

4,200

Total revenues

$99,850

Expenses

Appearance fees

$35,000

Meals and lodging

7,200

Advertising

4,900

Insurance

8,250

Rent

9,300

Sanitation

5,100

Fuel

11,350

Printing

3,200

Parking and traffic control

7,800

Cleanup

4,350

Miscellaneous

2,950

Total expenses

99,400

Surplus

$450

5. Planning for next year assume the following: A) Fixed costs will be $50,000. B) Variable costs will be 75% of parking and entry fees. C) Sponsor contributions will grow to $45,000. D) All concession profits will go to the civic group providing concessions. What will be the breakeven amount (in total) of parking and entry fees?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

4.11 Describe treatment approaches to PTSD.

Answered: 1 week ago