Tasks:

Read the scenario below and answer the questions that follow.

A traveling circus puts on 120 performances per year. Each performance sells 1,000 tickets at $45 per ticket. The circus has a cast of 45 performers. Each performer earns $300 per circus performance. The performers are paid after each performance. Other variable expenses include a program printing expense of $9 per customer. Annual fixed expenses for the circus total $787,500.

Requirements:

1. Compute revenue and variable expenses for each show.

2. Compute the number of shows needed each year to break even.

3. Compute the number of performances needed each year to earn a profit of $3,262,500.

4. Is the goal of earning profit of $3,262,500 realistic? Explain why or why not. Provide a rationale to support your response.

5. Prepare the circus' contribution margin income statement for 120 shows each year. Report only fixed and variable expenses.