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.
- Compute revenue and variable costs for each show.
- Use the equation approach to compute the number of shows Green Productions must perform each year to break even.
- 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.
- Prepare Green Production’s contribution margin income statement for 175 shows performed in 2016. Report only two categories of costs: variable and fixed.