Question

Madrigal Theater Company is interested in estimating fixed and variable costs. The following data are available for the month of December.


*Author royalties/fees are fixed because the theater pays for the right to put on the play; royalties and fees are not paid based on the number of tickets sold.

Required
a. Use account analysis to estimate fixed cost per month and variable costs per dollar of sales [i.e., estimate a and b in the equation Cost = a + (b x Sales)].
b. Assume that the selling price per ticket is $25.Based on your answer to part a, what is your estimate of the contribution margin ratio at MadrigalTheater?


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  • CreatedSeptember 18, 2013
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