Problem 3 what should be the average ticket prices

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Problem #3:What should be the average ticket prices for the KFBS concert if the fixed-pay fee is $200,000 and the Pavilion expects to sell 7,000 tickets and wants to earn$30,000 after 40% taxes?
Problem #4: Negotiating the fees for KFBS ALLStars: fixed-pay or per capita contracts?a)What is the maximum fixed fee that the Pavilion can pay the KFBS Allstars if the Pavilionwants to earn $45,000 after 40 percent tax and expects the show to have an average ticketprice of $22.12? Assume the show is expected to draw 6,000 paying ticket holders.
b)What is the maximum fixed fee that the Pavilion can pay the KFBS Allstars if the Pavilionwants to earn $45,000 after 40 percent tax and expects the show to have an average ticketprice of $22.12? Assume, including 25 percent comp tickets, the show is expected to be a sell-out.
c)Independent of (a) and (b), what is the maximum per capita fee that they Pavilion can pay theKFBS Allstars, whose concert is expected to be a sellout, if the Pavilion want to earn $180,000after $40,000 percent tax from an average ticket price of $22.12 per ticket?
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Problem #5: What role does CVP analysis and operating leverage play in contractnegotiations with different types of performers (fixed and per capita)?This operating leverage is different from financial leverage where most of the assets would beraised by issuing debt rather than equity-stock.The return on sales can potentially be higher using more operating leverage because once thebreak-even point is achieved in terms of sales dollars, all money (sales revenue) above thatdirectly applies to your contribution figure.However, the first is also in a more precarioussituation if the sales forecast is considerably overly optimistic and therefore overstated.In thatcase, the firm will not be able to meet the breakeven point because it does not have enough

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Term
Spring
Professor
HarryA.Newman
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