Brad Smith, executive director, is in the process of planning an exhibition of Titanic Artifacts, which will run from June 1 through September 1, 2011. Brad has put together some revenue & expense numbers in an effort to determine if the exhibition can be successful.
Brad's Revenue & Expense information
-An admission fee of $5 is charged to enter the museum, and attendance at the exhibition is an additional $12 per person. Approximately one-fifth of the individuals who are estimated to attend the exhibition would have come to the museum whether or not the exhibition was being held. Alternatively, four-fifth's of the individuals are coming specifically to attend the exhibition and would not have entered the museum without that attraction.
-Cost of leasing the exhibit from the Titanic exhibit vendor is $80,000. There would be an additional $4,000 charge for packing and transportation to and from the museum.
-Each attendee will be provided with a survey sheet at the end of the exhibit. It is estimated that 60% of the exhibit attendees will complete the survey. The cost of compiling the survey information and creating an analysis report is estimated at 75¢ per completed survey
-Depreciation expense related to the square feet of the museum attributed to the exhibit area is estimated to be $500 per month for the for the three month exhibit period.
-A plastic replica of the Titanic will be presented to each attendee at the exit of the exhibit. The cost of the model to the museum will be $2.00 each, which includes all shipping & handling fees. Models leftover at the end of the exhibit period can be returned for full refund. Since the extras will be returned along with the exhibit itself, no additional shipping or handling will be incurred.
-Brad and his assistant Sara will each spend approximately three months working with the project. Brad's annual salary is $48,000 and Sara's annual salary is $32,000.
-Analysis of prior data indicates that 20 percent of individuals entering the museum make a purchase at the museum store, with the average purchase price being $7. The store has a 30 percent average gross margin. It is assumed that the additional exhibit patrons will follow this same pattern of purchase.
-Special event insurance must be purchased for the three months of the exhibition. The total cost of additional insurance for the exhibition period amounts to $2,000.
-The cost of programs describing the Titanic exhibition will cost 20¢ each. These programs can be run on the in-house press each day (or hourly if necessary), so a just-in-time inventory of programs will be used with no anticipated over-runs.