Response to the following problem:
International Productions performs Cats, the play. The average show sells 1,000 tickets at $60 a ticket. There are 120 shows a year. Cats has a cast of 60, each earning an average of $320 a show. The cast is paid only after each show. The other variable expense is program printing costs of $8 per person. Annual fixed expenses total $299,200.
Required:
1. Compute revenue and variable expenses for each show.
2. Use the income statement equation approach to compute the number of shows Cats must make each year to break even.
3. Use the contribution margin approach to compute the number of shows needed each year to earn $4,264,000. Is this profit goal realistic? Give your reason.
4. Prepare the Cats contribution margin income statement for 120 shows for the year. Report only two categories of expenses: variable and fixed.