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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Number of Tickets Sold Cost 318,200 December Detail of Cost: 40,000 Author royalties/fees Wages (ticket office, ushers, etc) Rent Utilities Depreciation-theater equipment Owner's salary 80,000 147,200 60,000 7,000 14,000 10,000 318,200 Total