# Unit costs to volume for alltel pavilion cv diagram

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Unit Costs to Volume for Alltel Pavilion –CV diagram Each concert attendee is a unit of volume as it contributes to the total revenue per attendee including ticket sales and ancillary revenues (event parking, merchandise and concessions). The costs decrease as the volume increases. With more attendees, the 1
cost relationship is viewed as declining. This is because the fixed costs of running the pavilion (operating expenses) are usually constant. We would expect that the cost volume relationship would be the simple equation: TC = TFC + (UVC * X) TFC = Operating expenses and if applicable fixed fee contract performers UVC = Per capita contract performer fees and 10% of the parking, merchandise and concession profits X = Number of attendees Cost per unit Volume (units) 2
Problem #2: Complete two selected cost-volume-profit analyses for the show illustrated in Exhibit 2, the KFBS Allstars: Contribution Margin Income Statement \$ Per ticket Sales Revenue \$358,141 43.41 Less variable expenses: Variable expenses \$14,323 Total variable expenses \$14,323 1.74 Contribution Margin \$343,818 41.67 Less Fixed Expenses Fixed Direct Costs \$226,265 Total production exp \$15,506 Total operations exp \$14,991 Total advertising exp \$20,030 Total Fixed expense \$276,792 Net operating income \$67,026 Contribution Margin ratio = Contribution Margin = \$343,818 = .960 = 96% Sales \$358,141 = 41.67 = .959 = 96% 43.41 a) How many tickets must the ALLTEL Pavilion sell to break even? (Breakeven point in tickets)
b) How many tickets must ALLTEL sell to earn \$30,000 operating income after taxes, assuming a 40% tax rate? (Target Income per unit – tickets)
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