CVP, not-for-profit. Genesee Music Society is a not-for-profit organization that brings guest artists to the community’s greater metropolitan area. The music society just bought a small concert hall in the center of town to house its performances. The lease payments on the concert hall are expected to be $4,000 per month. The organization pays its guest performers $1,800 per concert and anticipates corresponding ticket sales to be $4,500 per concert. The music society also incurs costs of approximately $1,000 per concert for marketing and advertising. The organization pays its artistic director $33,000 per year and expects to receive $30,000 in donations in addition to its ticket sales.If the Genesee Music Society just breaks even, how many concerts does it hold?In addition to the organization’s artistic director, the music society would like to hire a marketing director for $25,500 per year. What is the breakeven point? The music society anticipates that the addition of a marketing director would allow the organization to increase the number of concerts to 41 per year. What is the music society’s operating income/(loss) if it hires the new marketing director?The music society expects to receive a grant that would provide the organization with an additional $17,000 toward the payment of the marketing director’s salary. What is the breakeven point if the music society hires the marketing director and receives the grant?

Question
Asked Dec 21, 2019
123 views

CVP, not-for-profit. Genesee Music Society is a not-for-profit organization that brings guest artists to the community’s greater metropolitan area. The music society just bought a small concert hall in the center of town to house its performances. The lease payments on the concert hall are expected to be $4,000 per month. The organization pays its guest performers $1,800 per concert and anticipates corresponding ticket sales to be $4,500 per concert. The music society also incurs costs of approximately $1,000 per concert for marketing and advertising. The organization pays its artistic director $33,000 per year and expects to receive $30,000 in donations in addition to its ticket sales.

  1. If the Genesee Music Society just breaks even, how many concerts does it hold?
  2. In addition to the organization’s artistic director, the music society would like to hire a marketing director for $25,500 per year. What is the breakeven point? The music society anticipates that the addition of a marketing director would allow the organization to increase the number of concerts to 41 per year. What is the music society’s operating income/(loss) if it hires the new marketing director?
  3. The music society expects to receive a grant that would provide the organization with an additional $17,000 toward the payment of the marketing director’s salary. What is the breakeven point if the music society hires the marketing director and receives the grant?
check_circle

Expert Answer

Step 1

1.

help_outline

Image Transcriptionclose

Particulars Ticket sale per concert Variable cost per concert Guest performers | Marketing and advertising Total variable cost per concert Contribution margin per concert Amount ($) Amount ($) 4,500 1,800 1,000 2.800 1,700 Fixed costs: Salaries Lease payments ($4,000 ×12) Total fixed costs 33,000 48,000 81,000 Less: Donations 30,000 51,000 Net fixed costs Table (1) Formula to calculate break-even in units: Fixed cost Break-even point Contribution margin per concert Substitute $51,000 for fixed costs and $1,700 for contribution margin per concert, S51,000 Break-even point S1,700 = 30 concerts

fullscreen
Step 2

2.

...
help_outline

Image Transcriptionclose

Given below is the statement for the computation of fixed costa: Particulars Ticket sale per concert Variable cont per concert Guest performers Marketing and advertising Total variable cost per concert Contribution margin per concert Amount (S) Amount (5) 4,500 1.800 1.000 2.800 1,700 Fized costs: 58,500 Salaries (533, 000 +$25, 500) Lease payments ($4,000 x12) Total fixed costs Less: Denations Net fited casts 48,000 106,500 30.000 76,500 Formula to caleulate break-even in unita: Fixedcost Break even paint Contribution mrgnper concert $76,500 Break-even point- $1,700 - 45 concerts Given below is the statement for the computation of operating income if 41 concerts are held Particulars Amount ($) Amount ($) 30,000 184.500 Donations Revenue ($4,500 x41) Total revenue Less: Variable cost Guest performers (51, 800 x41) 214,500 73,800 Marketing and advertising (51000 x 41) 41.000 Total variable cost per concert 114,800 Fixed costs: Salaries (533,000 - 525, 500) 58,500 Lease payments ($4,000 x12) Total fixed costs Less: Donations Operating los 48,000 106.500 30.000 (S36.800) Conclusion: Hence, Music Company needs to do 45 concerts to reach break-even point after appointing the new director. If in case only 41 concerts are beld, then it will result in loss of $36,800.

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in
BusinessAccounting

Cost Accounting

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: “Production managers and marketing managers are like oil and water. They just don’t mix.” How can a ...

A: Budget: The budget is a statement in which the estimated standards are set according to the needs of...

question_answer

Q: Question 2 part C, D and E

A: C-1. Compute Wilfred Trading company years of useful life for equipment all purchased on first day o...

question_answer

Q: A corporation with both preferred stock and common stock outstanding has a substantial credit balanc...

A:  

question_answer

Q: Financial assets include stocks and bonds. These are fairly simple securities that can often be valu...

A: Click to see the answer

question_answer

Q: A long-term investment in bonds with a cost of $500,000 was sold for $600,000 cash. (a) What was the...

A: a. Calculate the amount of gain or loss on the sale

question_answer

Q: Thomson Co. produces and distributes semiconductors for use by computer manufacturers. Thomson Co. i...

A: Click to see the answer

question_answer

Q: Berkshire Hathaway, the investment holding company of Warren Buffett, reports its “less than 20% own...

A: Equity investment: Equity investments are the stock instruments which claim ownership in the investe...

question_answer

Q: Which account does a merchandiser use that a service company does not use? Cost of Goods Sold Merch...

A:  

question_answer

Q: Dobbs Wholesale Antiques makes all sales under terms of FOB shipping point. The company usually ship...

A: 1) Under Dobbs' FOB policy, his company should record the sale when the goods leave the supplier's s...