British Productions performs London shows. The average show sells 1,200 tickets at
$50 per ticket. There are 120 shows a year. The average show has a cast of 70, each
earning an average of $300 per show. The cast is paid after each show. The other variable
cost is a program-printing cost of $7 per guest. Annual fixed costs total $459,000.
1. Compute revenue and variable costs for each show.
2. Use the income statement equation approach to compute the number of shows British Productions must perform each year to break even.
"3. Use the contribution margin approach to compute the number of shows
needed each year to earn a profit of $3,825,000. Is this profit goal realistic?
Give your reasoning."
"4. Prepare British Productions' contribution margin income statement for
120 shows for 2011. Report only two categories of costs: variable and fixed."
Solution depicts the steps to estimate the BEP in the given case.