You own a comedy club and have a show planned for this coming Saturday night. The projected financial information is below:

Ticket sales:300 tickets (capacity is 700)

Ticket price: $34 per ticket

Variable costs per ticket:  $4

You also have a two drink minimum policy (each customer must pay for two drinks) The average drink price (to the customer) is $10 and the variable cost for each drink is $2.

You are considering adding a well known comedian to the show lineup for Saturday.  If you add the comedian, you are sure that you will "sell out" the show (i.e., reach the capacity). If not, you will only sell 300 tickets.

The comedian's required fee for Saturday from YOU:

$23,400

Based on managerial accounting, should you add the comedian to Saturday's show?  (YES or NO)  -AND SHOW A SINGLE DOLLAR AMOUNT representing an increase or decrease in net income if you add the comedian. (and for full or any partial credit, show some calculations)

Answer rating: 100% (QA)

To determine whether to add the comedian to Saturdays show we need to compare the additional revenue ... View the full answer