Because of Taos’s location in the mountains of the southwest, the museum tends to have a seasonal pattern to its visitor flow with proportionally more people visiting TMSAC in the summer than in the winter. In addition, revenue from grants and memberships tends to flow into the museum unevenly throughout the year. The seasonal flow of visitors, grants, and membership revenues is distributed throughout the year as follows:

	Quarter 1	Quarter 2	Quarter 3	Quarter 4
Visitor Revenue	15%	25%	45%	15%
Membership Revenue	40%	20%	20%	20%
Grant Revenue	25%	50%	10%	15%

Fixed expenses are distributed evenly throughout the year, that is, 25 percent per quarter. The museum’s marketing director forecasts that 80,000 people will visit the museum during the coming fiscal year. TMSAC’s director of marketing has convinced the executive director that a museum shop can be operated profitably in a small space just off the main entrance. She agrees, and the shop is scheduled to open on the first day of the second quarter. The marketing director estimates that 5 percent of the people who visit the museum will make purchases from the shop. Based on his experience, he expects the average purchase to be $40. TMSAC’s business manager estimates that the cost of goods sold will be 75 percent of the museum shop’s sales revenue. The shop will be staffed by volunteers at no cost to TMSAC for the upcoming fiscal year.

Using the information above, including the gift shop, prepare a budget of revenues, support, and expenses for TMSAC for each of the four quarters of the fiscal year, and summarize the budget for the full year.

What impact would the inclusion of the gift shop have on TMSAC’s expected break-even volume during a normal full year of operation? You may assume that all other costs remain the same.

Answer rating: 100% (QA)

Quarter 1 Revenues Visitor Revenue 80000 x 15 12000 Membership Revenue 80000 x 40 32000 Grant Revenu... View the full answer