Question

In: Finance

ACE Productions hosts outdoor events and is planning for a large concert to be held at...

ACE Productions hosts outdoor events and is planning for a large concert to be held at a County Ampitheather in the

San Francisco Bay Area in October 2020. The Amphitheater seating capacity is 18,000. The following are the costs

incurred to host the event:

Rental Cost of the Ampitheater = $50,000

Event Promotion Costs = $30,000

Performer Booking Costs = 3 @ $25,000 each

PA/Sound Equipment Costs = $9,000

Lighting Costs = $5,000

Security Costs = $3,000

General/Parking Staff Costs = $2,000

Concession Costs per Concert Attendee = $15

a) Build a spreadsheet model that calculates a Profit/(Loss) based on selling all tickets when ticket prices are $29

per person.

b) Using the Goal Seek function, calculate the number of tickets that need to be sold to "break-even."

c) The COVID-19 Pandemic has resulted in uncertainty on the number of attendees the County will allow to events.

The County has informed ACE to plan for three (3) possible scenarios. The first scenario is full attendance without

social distancing. The second scenario is social distancing that limits capacity to 50% of full capacity and the third

scenario is social distancing that limits capacity to 25% of full capacity. Develop these three scenarios in a table

which identifies what will change. Use the Scenario Manager to show the scenario summaries.

d) Using a text box, explain if there are any scenarios that ACE might consider not hosting the concert. If you learned

that ACE was required to pay $75,000 in non-refundable deposits for the Amphitheater and the Performer Booking

Costs, would that change your answer? Explain.

Expert Solution

Given

Capacity	18,000
Price	29.00
Concession	-15.00
Actual Price	14.00

Sales Value for 18000 units @$ 14	2,52,000

Rental Costs	-50,000
Event Promotion Costs	-30,000
Performer Booking costs	-75,000
PA	-9,000
Lighting	-5,000
Security	-3,000
Parking	-2,000

Profit (byUsing Sum formula)	78,000

b.Calculation of Breakeven point = fixed cost / contribution per unit

No of Units	18000
Selling Price/conribution per Unit	14.00
Revenue	2,52,000
Fixed costs	174000.00
Break even Point	12428.57

jeff jeffy answered 2 years ago

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