Stubs-R-Us is a local event ticket broker. Last year, the company sold 980,000 t
ID: 2584421 • Letter: S
Question
Stubs-R-Us is a local event ticket broker. Last year, the company sold 980,000 tickets with an average commission of $5. Because of the general economic climate, Stubs expects ticket volume to decline by 20 percent. In addition, employees at a local insurance company headquarters accounted for 5 percent of Stubs’ volume. The headquarters relocated to another state and all the employees closed their accounts.
Offsetting these factors is the observation that the average commission per sale is likely to increase by 10 percent because the average ticket prices are expected to be larger in the coming year.
Required:
Estimate commission revenues for Stubs-R-Us for the coming year.
Explanation / Answer
Calculate estimate commission revenues :
Ticket sales volume = 980000*75% = 735000 tickes
Average commission per ticket = 5*1.1 = 5.5 per ticket
Estimate commission revenues = (735000*5.5) = $4042500