Calculating break even sales and sales to earn a target profit; preparing a contribution margin income statement.

Calculating break even sales and sales to earn a target profit; preparing a contribution margin income statement.

Green Productions performs London shows. The average show sells 1,300 tickets at $60 per ticket. There are 175 shows per 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 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 equation approach to compute the number of shows Green Productions must perform each year to break even.

3. Use the contribution margin ratio 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 Green Production’s contribution margin income statement for 175 shows performed in 2016. Report only two categories of costs: variable and fixed.

Requirements: 1OO

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