Question: Madison Classical Music Society is a not for profit organization

Madison Classical Music Society is a not- for- profit organization that brings guest artists to the community’s greater metropolitan area. The Music Society just bought a small concert hall in the center of town to house its performances. The lease payments on the concert hall are expected to be $ 4,000 per month. The organization pays its guest performers $ 1,500 per concert and anticipates corresponding ticket sales to be $ 4,500 per event. The Music Society also incurs costs of approximately $ 1,600 per concert for marketing and advertising. The organization pays its artistic director $ 30,000 per year and expects to receive $ 29,000 per year in donations in addition to its ticket sales.

1. If the Madison Classical Music Society just breaks even, how many concerts does it hold each year?
2. In addition to the organization’s artistic director, the Music Society would like to hire a marketing director for $ 28,000 per year. What is the breakeven point? The Music Society anticipates that the addition of a marketing director would allow the organization to increase the number of concerts to 53 per year. What is the Music Society’s operating income (loss) if it hires the new marketing director?
3. The Music Society expects to receive a grant that would provide the organization with an additional $ 14,000 toward the payment of the marketing director’s salary. What is the breakeven point if the Music Society hires the marketing director and receives the grant?

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  • CreatedJanuary 15, 2015
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