ACC501 Accounting for Decision Making

Module 2 – Case

COST–VOLUME–PROFIT ANALYSIS

Assignment Overview

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.

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.

Lower Orchestra Section (A)Upper Orchestra Section (B)Descriptions

Number

of

Performances

Cost per

Dance

Concert

(Direct Fixed Costs)

No. of Seats.Ticket PriceTickets sold per performanceNo. of seatsTicket PriceTickets sold per performanceHip-Hop Performance9$45,000200$90100%300$6090%Jazz and Tap Dance4$88,000200$90100%300$6060%Christmas Spectacular18$25,000200$140100%300$60100%

*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 incurred for each performance (variable costs)

Musicians$7,500Rental of auditorium$2,500Dancers’ compensation$7,000

Other costs incurred by Annie Smith’s Dance Center (common fixed costs)

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

Case Assignment