The Community Playhouse is a small non-profit organization dedicated to producing new and classic American stories. They provide a truly intimate home for the community to experience meaningful stories. They foster a nurturing environment for artists to take risks and create meaningful work.
The Playhouse's season runs July 1-June 30.
The Playhouse presents three shows each year, one in November, February and May. Each show consists of five performances.
Season tickets are sold from July 1 through August 31 of each season. The season package consists of one ticket to each of the three shows. So one season ticket package will include one ticket to the November performance, one ticket to the February performance and one ticket to the May performance. Season ticket holders receive priority seating and a 10% discount for their package.
Single tickets are purchased after the season ticket campaign is concluded. A single ticket is literally one ticket for one performance.
Create the budget and cash flow projection using the following information:
Revenue:
Five year ticket sales trends indicate the following schedule:
• 50 season ticket packages are expected to be sold evenly between July and August
• 15% of single tickets are sold in the month that is two months prior to the month of the production
• 35% of single tickets are sold in the month that is one month prior to the month of the production
• 50% of single tickets are sold in the month of the production
(Hint: Determine what the total ticket expectation is for each show, then reduce the number of season tickets to each show. The difference between total ticket expectations a show less season tickets for that show will be the single ticket expectation for that show.)
The total ticketing expectations for the three productions and the ticket prices are as follows:
• Pride & Prejudice-250 patrons per performance; $25/ticket
• Death of a Salesman-300 patrons per performance; $40/ticket
• Cat on a Hot Tin Roof-200 patrons per performance; $35/ticket
Every ticket is charged an additional $.50/ticket facility maintenance fee to maintain the building.
Concessions: gross percaps (the average amount spent by each patron on concessions) is $1.00. Net percaps-$.60 (revenue less cost of goods sold).
The Playhouse was awarded the Tom Scullen Excellence in Arts Grant for the upcoming season. The Playhouse will receive $10,000 in the month following each of the three productions after the Playhouse submits a follow-up summary of the production to the granting committee. The Playhouse's executive director will ensure the completed paperwork will be submitted on time.
A local business has pledged to sponsor the Series for $15,000 and has indicated that the Playhouse can expect a pledge payment of $7,500 in July and $7,500 in January.
Each year during the month of December, the Playhouse holds a Winter Gala special event. The event is a reception and dinner on the stage with a special guest speaker. The ticket cost is $250/person. Last year the event was attended by 150 community members. This year the executive director has challenged the Board to increase attendance by 10%. The goal is to net 25% of the ticket price.
The Playhouse has an endowment held at the local Community Foundation. Each year in April, the Foundation sends a check in the amount equaling 5% of the prior three year average ending fund balance. The average year end fund balance for the prior three years was $50,000, $60,000 and $65,000.
Expenses
The Playhouse employs the following:
• Executive Director-ensures mission of organization is delivered to the community, oversees day to day operations and secures unearned revenue sources such as grants and sponsorships. Annual salary-$36,000; general and administrative
• Accountant-oversees day to day financial and HR matters and oversees the ticket office. Annual salary-$21,000; general and administrative
• Director of Theatrical Productions-oversees the building, stage and front of house activities, coordinates special events and oversees the community volunteers. Annual salary-$24,000; equal division between general and administrative and the three shows.
• Ticket agents-part-time staff that sell tickets year round. Annual total wages-$12,000; equal division between the three shows
• Artistic Director-creates and directs each production and oversees community actors. Wages-$6,000 per production, paid in three equal, monthly installments that include the month of the production as well as the two preceding months.
Each presentation is allotted $2,000 per show title for advertising. The advertising is split evenly between the month prior to the month of the presentation and the month of the presentation.
Also, each show is allowed to spend 10% of the total revenue (earned and contributed) budgeted for that show on set design. The amount is budgeted to be spent in the month prior to the month of the presentation.
The Playhouse's general and administrative bills:
• Rent-$2,000 per month; includes utilities.
• Insurance-$1,000 per month; includes property, workman's comp and Directors and Officers insurance.
• Legal and accounting-$5,000 for annual audit performed and paid in July. Playhouse does not anticipate any legal needs for upcoming season.
• Equipment-$100 per month rental for two copier/printers (one color) with annual maintenance agreements included.
• Supplies-average $240 per year; budgeted evenly over the year.
• Printing and copying-$1,000 for special mailings created to inform the community about the performance opportunities (auditions, tech crew needs, etc) and general mailings. One-fourth spent in November and three-fourths spent in June of each season.
• Telecommunications-$100 per month for telephone and internet service.
• Travel and meetings-$450 each for executive director and artistic director to attend annual, statewide conference in February. In addition, travel expense reimbursement for meetings outside of office average $300 per year, budgeted evenly each month.
• Staff training/development-accountant attends annual nonprofit accounting and tax seminar in October for $150. The director of theatrical productions plans a first aid training seminar for volunteers in August. Estimated cost of seminar led by a local health organization is $350.
• Contract services-$500 per month for ProOne LLC to provide cleaning and building maintenance services.
Assignment
1. Prepare the Playhouse's budget for the upcoming season on the first tab of the Assignment 7.1 Excel spreadsheet.
2. Prepare the Playhouse's cash flow projection for the upcoming season on the second tab of the Assignment 7.1 Excel spreadsheet.
3. Please feel free to discuss the budgets on the discussion board this week.
Attachment:- Copy-of-Assignment-7.1-budget-and-cash-flow.rar