# Use the contribution margin approach to compute the number of shows needed each year to earn a...

## Question:

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. 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? Explain.

## Target Profit:

Target Profit is a profit that the management wants to earn in the next accounting period. These is also used to draw a cost plans and to help prepare in cases where financing is needed.

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The answer is The profit goal is not realistic because the company should sell a 168,000 tickets but the total estimated tickets to be sold is only...

Target-Profit & Break-Even Analysis

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Chapter 3 / Lesson 5
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Total costs are compared to total revenue and are either lower (profit), higher (loss), or equal (break-even point). Learn to calculate this and identify target profit, as well as establish a margin of safety to accommodate unanticipated risks.