A group of community enthusiasts think that an air show would be a positive event for Warsaw, Indiana and greater Kosciusko County. The goal was an annual air show that would improve with each passing year and add value to the community. Financially, the objective was to break even in the first year and earn $10,000 in the second year. Once up and running, the goal was to earn an average of $25,000 per year. The annual surpluses would be available to reinvest in the air show and support other community activities.

The original group of enthusiasts added strategically to their number and formed an air show committee. The committee quickly determined that 1) appearance fees would be necessary to attract desirable aircraft, 2) parking and entry fees would be insufficient to cover the air show costs, and 3) thus, funds would have to be raised through sponsorships. Sponsorship levels were set at $100, $1,000, $2,000 and $5,000.

A local civic group agreed to provide concessions. Profits from the concessions will be split evenly between the air show and civic group.

The air show will take place on the third weekend in August, starting on Friday evening and ending on Sunday afternoon. Entry fees are $10 for adults and $5 for children 12-and-younger. Parking fees are $5 per vehicle.

During the first year of the air show attendance and parking were as follows:

	Vehicles Parked	Adult Admissions	Children Admissions
Friday	800	1,000	225
Saturday	1,750	2,450	1,100
Sunday	625	775	180
Total	3,175	4,225	1,505

Below are revenue and expense figures for the first year of the air show:

Revenues
Sponsor contributions	$30,000
Parking fees	15,875
Entry fees	49,775
Concessions	4,200
Total revenues		$99,850
Expenses
Appearance fees	$35,000
Meals and lodging	7,200
Advertising	4,900
Insurance	8,250
Rent	9,300
Sanitation	5,100
Fuel	11,350
Printing	3,200
Parking and traffic control	7,800
Cleanup	4,350
Miscellaneous	2,950
Total expenses		99,400
Surplus		$450

What will be the amount (in total) of parking and entry fees to earn a profit of $10,000? To earn a profit of $25,000?

What will be the percentage increase in parking and entry fees to earn a profit of $10,000? To earn a profit of $25,000? Assuming this translates into a similar percentage increase in attendance, will there be potential capacity problems if the air show grounds can only accommodate 2,000 vehicles per day and 4,000 persons per day?

Prepare a budgeted income statement for next year based on the scenario sketched in part 5 above.

How are expenditures in year one relevant to the decision as to whether to continue the air show in year two?