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##### England Productions performs London shows. The average show sells 1,300 tickets at $60 per ticket.

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solution

**Question**

Problem 1;England Productions performs London shows. The average show sells 1,300 tickets at $60 per ticket. There are 150 shows a year. No additional shows can be held as the theater is also used by other production companies. The average show has a cast of 65, each earning a net average of $340 per show. The cast is paid after each show. The other variable cost is a program-printing cost of $8 per guest. Annual fixed costs total $728,000.;Requirements;1. Compute revenue and variable costs for each show.;2. Use the income statement equation approach to compute the number of shows England Productions must perform each year to break even.;3. Use the contribution margin approach to compute the number of shows needed each year to earn a profit of $5,687,500. Is this profit goal realistic? Give your reasoning.;4. Prepare England Productions' contribution margin income statement for 150 shows performed in 2012. Report only two categories of costs: variable and fixed.;Problem 2;The contribution margin income statement of Delectable Donuts for August 2012 follows;DELECTABLE DONUTS;Contribution Margin Income Statement;For the Month of August 2012;Sales revenue;$150,000;Variable costs;Cost of goods sold;$41,000;Marketing costs;15,000;General and administrative costs;4,000;60,000;Contribution margin;$90,000;Fixed costs;Marketing costs;37,800;General and administrative costs;12,600;50,400;Operating income;$39,600;Delectable sells four dozen plain donuts for every dozen custard-filled donuts. A dozen plain donuts sells for $4, with total variable cost of $1.60 per dozen. A dozen custard-filled donuts sells for $5, with total variable cost of $2 per dozen.;Requirements;1. Calculate the weighted-average contribution margin.;2. 2. Determine Delectable's monthly breakeven point in dozens of plain donuts and custard-filled donuts. Prove your answer by preparing a summary contribution.

Paper#75278 | Written in 18-Jul-2015

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