What are the V.C and F.C in question 2-5? What assumptions were necessary to com
ID: 2483268 • Letter: W
Question
What are the V.C and F.C in question 2-5? What assumptions were necessary to compute the predicted 2009 operating income in requirement 2? Marge Porter is the manager of Stanford's traditional Sunday Flicks. Each Sunday, a film has two showings. The admission price is deliberately set at a very low $3. She sells a maximum of 500 tickets for each showing. The rental of the auditorium is $330 and labor is $435, including $90 for Porter. Porter must pay the film distributor a guarantee, ranging from $300 to $900, or 50% of gross admission receipts, whichever is higher. Before and during the show, she sells refreshments; these sales average 12% of gross admission receipts and yield a contribution margin of 40%. On June 3, Porter screened Little Miss Sunshine. The film grossed $2,250. The governance to the distributor was $750, or 50% of gross admission receipts, whichever is higher. What operating income was produced for the Students' Association, which sponsored the showings? Recompute the results if the film grossed 51,400. The "four-wall" concept .is increasingly being adopted by movie producers. In this plan, the movie's producer pays a fixed rental to the theater owner for, say, a week's showing of a movie. As a theater owner, how would you evaluate a "four-wall" offer? Many churches sponsor bingo games, a tradition stemming from the time when only specific nonprofit institutions were allowed to sponsor games of chance. Reverend Justin Olds, the pastor of a new parish in Orange County, is investigating the desirability of conducting weekly bingo nights. The parish has no ball, but a local hotel would be willing to commit its hall for a lump-sum rental of $600 pet night. The rent would include cleaning, setting up and taking down the tables and chairs, and so on.Explanation / Answer
As the question requires only fixed and variable cost determination, the same has been provided below:
________
Fixed costs remain constant irrespective of the level of production.
Based on the information provided in the question, the fixed cost will have following components:
Fixed Cost = 330 (Rental of the Auditorium) + 435 (Labor) = $765
_____
The variable cost would be determined as follows:
The variable cost would comprise of guarantee to be paid to the film distributor as it is linked to the value of gross receipts. For Instance, if the total gross receipts for a sunday are $2,250, Porter will be required to pay $750 or $1,125 (50% of $2,250) to the film distributor whichever is higher.
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