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Exercise 9.2 Calculate Earned Revenues 9.5 Gross Profit

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Exercise 9.2 Calculate Earned Revenues

Kirkland Theater sells season tickets for six events at a price of $180. In pricing the tickets, the planners assigned the leadoff event a value of $45 because the program was an expensive symphony orchestra. The last five events were priced equally; 1,200 season tickets were sold for the 2010 season.

Required:
a. Calculate the theater's earned revenue after the first three events have been presented.
b. About 95% of the season ticket holders attended the first event. Subsequent events were attended by about 80% of the season ticket holders. To what extent, if any, should the attendance data impact revenue recognition? Explain your answer.

Exercise 9.5 Calculate gross profit, cost of goods sold, and selling price

MBI, Inc., had sales of $141.6 million for fiscal 2010. The company's gross profit ratio for that year was 31.6%.

Required:
a. Calculate the gross profit and cost of goods sold for MBI, Inc., for fiscal 2010.
b. Assume that a new product is developed and that it will cost $1,860 to manufacture. Calculate the selling price that must be set for this new product if its gross profit ratio is to be the same as the average achieved for all products for fiscal
2010.
c. From a management viewpoint, what would you do with this information?

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Solution Summary

The response contains an attached Excel file with instructions on the computational portions.

Solution Preview

See excel, attached for the instructions on the computational portions.

9.2, part b
Attendance would not impact the earned revenue unless tickets were refundable or transferable to another show. Otherwise the ticket is forfeited ...

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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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