Reference no: EM132079580

Case - The Show Must Go On - making the numbers work for a not-for-profit community theater company: a managerial accounting and finance case By Jayanti Bandyopadhyay, Miranda Lam and Sanjay Kudrimoti

Case Questions:

1. Use the information provided above to prepare a Budgeted Income Statement. Have two main sections titled Receipts and Expenditures. Within the sections, make sure to have sub- categories so that actual costs could be compared with budget subsequently. Proper accounting format with currency should be used.

2. Using the budget prepared in 1:

a. Identify each cost as variable or fixed in relation to tickets sold.

b. In the first case, assume that all funds are to come from ticket sales only and that there are four shows in total. Compute the break-even point in number of tickets to be sold and in dollars.

c. In the second case, assume the same in a) but only three shows in total. Compute the break-even point in number of tickets to be sold and in dollars.

d. In the third case, assume that SETU would receive sponsorship funds in addition to ticket sales for four shows. Compute the break-even point in number of tickets to be sold and in dollars.

e. In the fourth case, assume that SETU would receive sponsorship funds in addition to ticket sales for three shows. Compute the break-even point in number of tickets to be sold and in dollars.

f. Comment on the feasibility of the required number of ticket sales computed from above, keeping in mind the nature of the play, that it is staged by a community theater organization, and the ethnicity aspect. Provide suggestions to the group about ways to achieve the necessary amount of ticket sales.

3. Evaluate the importance of opportunity cost:
a. Define opportunity costs.
b. Identify and provide the approximatevalue of resources that were donated by actors and patrons.
c. Incorporate these opportunity costs and measure its impact on the budgeted income stated in question 1 and the breakeven numbers calculated in question 2.

4. Extra Question: In light of the added opportunity costs discussed above, what price would SETU have to charge to breakeven for this production if they had to pay for all donated services, assuming they could reach (a) 60% capacity, (b) 80% capacity, (c) 90% capacity.

Attachment:- Theater Case.zip