Question
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?
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