Horngrens accounting 11th edition chapter 21 question 57B City Productions perfo

ID: 2580149 • Letter: H

Question

Horngrens accounting 11th edition chapter 21 question 57B City Productions perform london shows. The avg show sells 900 tickets at 65 per ticket, 140 shows per yr. Avg show has cast of 55 each earning avg of 330 per show, the cast is pd after each show. The other variable cost is a cost of $9 per guest. Annual fixed cost total 580500. !)use equation approach to compute # of shows city prod must perform to break even. 2)use Contribution margain ratio approach to compute the # of shows needed each yr to earn profir of 4,128,000, Is this profit goal realistic? give reasoning. 3) prepare City Productions contribution margain income statement for 140 shows performed in 2016. report only 2 categories of costs: variable and fixed.

Explanation / Answer

Particulars

working

Sales revenue per show

900*65

58500

Variable cost:

Cost of performers

(330*55)

18150

Cost of programs

(900*9)

8100

26250

Contribution

32250

Break even (in shows)

Fixed Cost/Contribution

580500/32250

18 shows

Contribution Margin Ratio

contribution/Sales

32250/58500

55.13%

Required sales in dollars

(Fixed cost + Target profit)/Contribution Ratio

(580500+4128000)/55.13%

8540721.93

Required sales in Units:

8540721.93/58500

145.9952467

145 shows per year is more than the maximum possible shows of 140 shows per year

Profit goal is unrealistic