The Annie Smith Dance Center

The Director of Annie Smith Dance Center is asking for assistance with the financial aspects of running a professional group of performers. She wants financial information presented in an easy to read format and a better understanding of the profitability of the concerts and the organization as a whole.

The Annie Smith professional group features three styles of dance concerts each year. Two of the dance concerts showcase a different genre. The third performance is a Christmas Spectacular, which is the most popular and is therefore scheduled every year. The table below provides information about expected ticket sales for the performances.

Lower Orchestra Section (A) Upper Orchestra Section (B)
Descriptions No. of Seats. Ticket Price Tickets sold per performance No. of seats Ticket Price Tickets sold per performance
Hip-Hop Performance 150 $85 100% 450 $50 90%
Jazz and Tap Dance 150 $85 100% 450 $50 60%
Christmas Spectacular 150 $125 100% 450 $50 100%

Ms. Smith has prepared a tentative schedule for the coming season. The table below also shows the type and number of performances and direct cost per type of concert.

Descriptions Number of Performances Cost per Dance Concert
(direct fixed costs)*
Hip-Hop Concert 10 $48,000
Jazz and Tap Dance 5 86,000
Christmas Spectacular 20 22,000
Total Direct Fixed Costs $156,000

Examples of direct fixed costs are costumes, rehearsals, royalties, guest artist fees, choreography, and salaries of production staff, music, and wardrobe for each of the concerts. This amount does not change with the number of performances.

Additional costs:

Variable costs associated with each performance are shown below.

Musicians $6,100
Rental of auditorium 2,500
Dancers’ compensation 6,700

Annual general administrative and operating costs for the dance center are:

Administrative staff $185,000
Insurance 25,000
Marketing 115,000
General office expenses 90,000


Computations (use Excel)

Summarize key financial information in a table as shown below.

Name of Dance Concert Revenues/
Variable Costs/
Contribution Margin/
Number of Performances Total Contribution/
Type of Dance Concert
Direct Fixed Costs Segment Margin/
Type of Concert

Use the information in the table you completed tcomputingthe number of performances required to break even for each concert. Do not include general and administrative expenses. These are separate computations for each dance concert.

Compute break even for the organization as a whole (include all fixed expenses) and express the result in revenues instead of the number of performances.

Ms. Smith wants the Dance Center to generate at least $200,000 in operating profit. What level of revenues does the performance group need to achieve to meet this goal? Prepare an income statement in good format to support the computations.

Give a recommendation about changes Ms. Smith can implement to achieve the target profit. Support your idea with computations.



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