I have to fill in the below chart and answer questions below.. with below data..
ID: 2475263 • Letter: I
Question
I have to fill in the below chart and answer questions below.. with below data..
Title
Name of Dance Concert
Revenues/Performance
Variable Costs/Performance
Contribution Margin/Performance
Total Contribution/Type of Dance Concert
Direct Fixed Costs
Segment Margin/Type of Concert
1.
2.
3.
4.
Total
Prepare a segmented income statement in good format.
Compute the number of performances required to break even for each concert. These are separate computations for each dance concert.
Compute break even for the organization as a whole and express the result in revenues instead of the number of performances.
Ms. Smith wants to performance group to show at least $150,000 in operating profit. What level of revenues does the performance group need to achieve to meet this goal?
Descriptions
Number of Performances
Cost per Dance Concert (direct fixed costs)
Hip Hop Concert
10
$45,000
Jazz and Tap Dance
5
88,000
Modern Dance
10
95,000
Christmas Spectacular
20
25,000
$253,000
Additional costs:
Variable costs associated with each performance are shown below.
Musicians
$7,500
Rental of auditorium
2,500
Dancers' compensation
7,000
General administrative and operating costs for the dance center are:
Administrative staff
$185,000
Insurance
25,000
Marketing
215,000
General office expenses
90,000
Lower Orchestra Section (A)
Upper Orchestra Section (B)
Descriptions
No. of Seats
Ticket Price
Tickets Sold per Performance
No. of Seats
Ticket Price
Tickets Sold per Performance
Hip Hop Performance
150
$85
100%
450
$50
90%
Jazz and Tap Dance
150
$85
100%
450
$50
60%
Modern Dance
150
$85
100%
450
$50
95%
Christmas Spectacular
150
$125
100%
450
$50
100%
Title
Name of Dance Concert
Revenues/Performance
Variable Costs/Performance
Contribution Margin/Performance
Total Contribution/Type of Dance Concert
Direct Fixed Costs
Segment Margin/Type of Concert
1.
2.
3.
4.
Total
Explanation / Answer
The calculation of revenues per performance: HiP Hop Performance Jaz and Tap Modern Christmas Speculator Revenues: Lower Orchestra(150*100%*$85), (150*100%*$125) $ 12,750 $ 12,750 $ 12,750 $ 18,750 Upper Orchestra(450*90%*$50):(450*60%*$50);(450*95%*$50);(450*100%*$50) $ 20,250 $ 13,500 $ 21,375 $ 22,500 Total revenues per performance $ 33,000 $ 26,250 $ 34,125 $ 41,250 Revenue calculation: HiP Hop Performance Jaz and Tap Modern Christmas Speculator Lower orchestra: No. of seats (a) 150 150 150 150 Occupancy (b) 100% 100% 100% 100% Rate © $85 $85 $85 $125 Revenue (a*b*c)=(1) $12,750 $12,750 $12,750 $18,750 Upper orchestra: No. of seats (a) 450 450 450 450 Occupancy (b) 90% 60% 95% 100% Rate © $50 $50 $50 $50 Revenue (a*b*c)=(2) $20,250 $13,500 $21,375 $22,500 Total revenues (1+2) $33,000 $26,250 $34,125 $41,250 Calculation of break even number of performances: HiP Hop Performance Jaz and Tap Modern Christmas Speculator Revenues per performance $33,000 $26,250 $34,125 $41,250 Less: Variable cost per performance $ (17,000) $ (17,000) $ (17,000) $ (17,000) Contribution margin $16,000 $9,250 $17,125 $24,250 Fixed cost per dance $ 45,000 $ 88,000 $ 95,000 $ 25,000 Break even performances 3 10 6 1 Break even performances for each dance=Total fixed cost per dance/contribution margin per performance The break even of the organization is calcualted as under: Total fixed cost : General and administrative and operating cost for dance centre: Administrative staff $ 185,000 Insurance $ 25,000 Marketing $ 215,000 General office expenses $ 90,000 Total fixed cost $ 515,000 Contribution margin percentage for the organization is calculated as under: HiP Hop Performance Jaz and Tap Modern Christmas Speculator Total No. of performances 10 5 10 20 Contribution margin per performance $16,000 $9,250 $17,125 $24,250 Contribution margin per dance $160,000 $46,250 $171,250 $485,000 $862,500 Less fixed cost per dance $ (45,000) $ (88,000) $ (95,000) $ (25,000) $ (253,000) Contribution margin per dance $115,000 ($41,750) $76,250 $460,000 $609,500 Contribution margin percentage=contribution margin/Revenues 71% Break even revenues for the organization is calculated as under=fixed cost/contribution margin ratio =($515,000/0.71) =$725,352 The break even revenue for an organization is $725,352. To meet the operating profit of $150,000 the organization should earn revenues of following amount. Revenues=(Fixed cost+Desired profit)/contribution margin ratio '=($515,000+$150,000)/0.71 '=$936,620 The organisation should earn revenues of $936,620 for operating profit of $150,000.