Question

Problem 12 Break-even with multiple products Boston Ballet is located in Boston. The company is housed in the Opera House in Boston downtown. The company features five different ballets per year: The Dream, Peter Pan, The Nutcracker, Sleeping Beauty, and Swan Lake. The tentative scheduled for each ballet is as following: heam Peter Pan Nutcracker Sleeping Beauty Swan Lake 20 10 To produce each ballet, there are costs for costumes, props, rehearsals, royalties, guest artist fees, choreography, salaries of production staff, music, and wardrobe. These costs are fixed for a particular ballet regardless of the number of performances. These direct fixed costs are-given below for each ballet. Dream Peter Pan Nutcracker Sleeping Beauty 345,000 275,500 70,500 Swan Lake Other fixed costsfor the whole company are as follows: Advertising 80,000 15,000 222,000 Insurance Administrative Salaries Office rental, phone, etc Total 401,000 For each performance of each ballet, the following costs are incurred: Symphony 3,800 Opera House rental700 Dancers' payroll Total 8,500

Answer 1

	INCOME STATEMENT
	DREAM:
	Sales Revenue	$150,900	((114*35)+(0.8*756*25)+(0.75*984*15))*5
	Variable Costs	$42,500	(5*8500)
	Contribution Margin	$108,400
	Fixed Costs	$275,500
	Operating income	($167,100)
	PETER PAN
	Sales Revenue	$150,900	((114*35)+(0.8*756*25)+(0.75*984*15))*5
	Variable Costs	$42,500	(5*8500)
	Contribution Margin	$108,400
	Fixed Costs	$145,500
	Operating income	($37,100)
	NUTCRACKER
	Sales Revenue	$753,000	((114*35)+(756*25)+(984*15))*20
	Variable Costs	$170,000	(20*8500)
	Contribution Margin	$583,000
	Fixed Costs	$70,500
	Operating income	$512,500
	SLEEPING BEAUTY
	Sales Revenue	$301,800	((114*35)+(0.8*756*25)+(0.75*984*15))*10
	Variable Costs	$85,000	(10*8500)
	Contribution Margin	$216,800
	Fixed Costs	$345,000
	Operating income	($128,200)
	SWAN LAKE
	Sales Revenue	$150,900	((114*35)+(0.8*756*25)+(0.75*984*15))*5
	Variable Costs	$42,500	(5*8500)
	Contribution Margin	$108,400
	Fixed Costs	$155,500
	Operating income	($47,100)
	Number of performance to reach Break Even for each ballet
	DREAM:
A	Contribution Margin	$108,400
B	Contribution per performance	$21,680	(108400/5)
C	Fixed Costs	$275,500
D=C/B	Break even performance	13	Rounded to next higher round number
	PETER PAN
A	Contribution Margin	$108,400
B	Contribution per performance	$21,680	(108400/5)
C	Fixed Costs	$145,500
D=C/B	Break even performance	7	Rounded to next higher round number
	NUTCRACKER
A	Contribution Margin	$583,000
B	Contribution per performance	$29,150	(583000/20)
C	Fixed Costs	$70,500
D=C/B	Break even performance	3	Rounded to next higher round number
	SLEEPING BEAUTY
A	Contribution Margin	$216,800
B	Contribution per performance	$21,680	(216800/10)
C	Fixed Costs	$345,000
D=C/B	Break even performance	16	Rounded to next higher round number
	SWAN LAKE
A	Contribution Margin	$108,400
B	Contribution per performance	$21,680	(108400/5)
C	Fixed Costs	$155,500
D=C/B	Break even performance	8	Rounded to next higher round number