المحاسب الإداري المعتمد الجزء 2 C. Decision Analysis

Pellbrook: Can the Winter Lantern Trail Pay Its Way?

Pellbrook Botanic Garden Trust

Question of 7 Pellbrook: Can the Winter Lantern Trail Pay Its Way?

Pellbrook: Can the Winter Lantern Trail Pay Its Way? Case-based question

الحالة

Pellbrook Botanic Garden Trust is a nonprofit that runs a public garden on the edge of a mid-sized city. This winter it plans to stage its first Winter Lantern Trail, an illuminated evening walk through the garden, open for 50 nights in December and January.

The trustees' resolution approving the trail sets one financial condition: "The trail is to need no subsidy from the garden's general funds. Its season result, after the design studio's royalty, ticketing fees and all fixed costs, must be a surplus of at least nil."

Tickets are sold in two types: adult at $16.00 and child (under 16) at $9.00. Two charges are calculated on gross ticket revenue, meaning the full price the visitor pays: a royalty of 9% to the design studio that owns the lantern artworks, under its rental contract with the garden, and online ticketing and card-processing fees of 7%. The trail has no other variable costs.

The season's fixed costs are lantern installation and rental of $112,000, security and stewards of $41,500, generators and power of $18,500, and marketing of $14,000, a total of $186,000. Timed-entry slots limit attendance to 600 visitors a night, or 30,000 for the season.

The finance officer has built the draft budget from an average night of 136 adult and 204 child visitors:

Average night	Adult	Child	Night total
Visitors	136	204	340
Gross ticket revenue	$2,176.00	$1,836.00	$4,012.00
Royalty at 9% of gross	(195.84)	(165.24)	(361.08)
Ticketing and card fees at 7% of gross	(152.32)	(128.52)	(280.84)
Net ticket revenue	$1,827.84	$1,542.24	$3,370.08

Over the 50-night season, that is 17,000 visitors and net ticket revenue of $168,504, which falls $17,496 short of the $186,000 of fixed costs. The draft budget therefore does not yet meet the trustees' condition.

الافتراضات

The visitor mix is 40% adults and 60% children (136 of every 340 visitors are adults) at every attendance level, unless a question changes it. Treat the mix as a planning average: a break-even visitor count does not have to split into whole numbers of adults and children.
Break-even attendance is the season attendance at which net ticket revenue exactly covers the season's fixed costs, so the season result is nil.
Round every visitor count up to the next whole visitor, because a count rounded down would leave a small shortfall. Keep full precision until that final step.
Fixed costs cover the whole season and do not change for any attendance up to the 30,000-visitor capacity. Ticket prices and the 9% and 7% rates stay the same at every volume.
The royalty rate is a term of the garden's contract with the design studio. Ticket sales are the trail's only income, and no complimentary tickets are issued.
A question that says "for this question only" changes one item of the draft budget. Every other item stays at its budget value, and the change does not carry into other questions. Other questions use the draft budget.

What share of each dollar of gross ticket revenue remains as contribution toward the trail's fixed costs?

الإجابة 16.0% 84.0% 84.6% 91.0%

Select the THREE statements about the trail's break-even position under the draft budget's assumptions that are correct.

اختيار 3 إجابات. المحدد 0 / 3

الإجابة At the budgeted mix, the weighted-average contribution per visitor, after the royalty and fees, is about $9.91. Break-even attendance should weight each ticket type's contribution by its share of budgeted gross ticket revenue. Break-even gross ticket revenue is about $221,429, whatever the adult/child mix. At the budgeted mix, the trail breaks even at 18,766 visitors. The break-even visitor count is the same for any adult/child mix, because both ticket types carry the same charge rates. At the budgeted mix, the trail breaks even at 15,763 visitors.

The trustees want to know how far break-even attendance could move if the visitor mix is not as planned. Complete the finance officer's summary, applying the case's rounding rule. (1) If every visitor bought a child ticket, the trail would break even at All-child break-even visitors. (2) If two adults came for every child, it would break even at Break-even with two adults per child visitors. (3) If every visitor bought an adult ticket, it would break even at All-adult break-even visitors. (4) These counts differ, although both ticket types bear the same charge rates, because Why the counts differ . (5) If a schools promotion brought in more children, so that the adult share of visitors fell below the budgeted 40%, break-even attendance would Effect of a lower adult share .

The trustees ask the finance officer to use sensitivity analysis to find which budget assumptions the trail's viability depends on most. Which approach applies sensitivity analysis correctly to this CVP model?

الإجابة Change each input in turn by the same percentage, such as 10%, keeping the rest at base values, and rank inputs by how far break-even attendance moves. Change the royalty rate and recalculate break-even, but keep the draft budget's weighted-average contribution per visitor, because the visitor mix has not changed. Apply each tested change on top of the previous ones, so that the final break-even figure shows the combined effect of all the changes together. Test changes in the visitor mix by recalculating break-even gross ticket revenue, because that single figure captures the full effect of any change in the mix.

For this question only, the design studio agrees to cut its royalty from 9% to 6% of gross ticket revenue. All other draft-budget assumptions, including the 40% adult / 60% child visitor mix, are unchanged. What would the trail's break-even attendance for the season be? Enter a whole number of visitors, rounded up to the next whole visitor.

الإجابة visitors

رقم صحيح.

Consider each change below separately, starting from the draft budget each time. Every other assumption (ticket prices, charge rates, fixed costs, capacity and the 40/60 visitor mix) stays at its budget value unless the change itself alters it. Select the THREE changes that would raise the break-even visitor count.

اختيار 3 إجابات. المحدد 0 / 3

الإجابة A local energy firm agrees to supply the generators and power free of charge, removing that $18,500 cost. Every ticket now includes a hot drink from the garden's coffee bar, which costs the trail $0.45 per visitor. Timed-entry slots are cut from 600 to 520 visitors a night for crowd safety, with no change in any cost. The adult price is cut from $16.00 to $14.50 to match a rival winter attraction, and the visitor mix does not change. The design studio replaces its 9% royalty with a flat fee of $19,000 for the season. The garden's insurer requires parking-lot attendants every night, adding $5,000 to the season's fixed costs.

Use the draft budget, not the royalty change described in an earlier question. How many visitors beyond the draft budget's 17,000 for the season would the trail need, at the 40/60 mix, to remove the season shortfall? Enter a whole number of additional visitors, rounded up to the next whole visitor.

الإجابة visitors

رقم صحيح.

تظهر الدرجات والإجابات الصحيحة والشروح فور تسليم الإجابات. ولا يحصل السؤال غير المُجاب على أي درجة.

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