Former NFL coach Joe Gibbs is highly sought after as a guest speaker. His fee can...
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Former NFL coach Joe Gibbs is highly sought after as a guest speaker. His fee can run as high as $150,000 for a single two- hour appearance. Recently, he was asked to speak at a seminar offered by the National Sports in Education Foundation (NSEF). Due to the charitable nature of the organization, Mr. Gibbs offered to speak for $100,000, NSEF planned to invite 350 guests who would each make a $500 contribution to the organization. The Foundation's executive director was concerned about committing so much of the organization's cash to this one event. So instead of the $100,000 fee she countered with an offer to pay Mr. Gibbs 50% of the revenue received from the seminar and no other payments. Required a. Classify the two offers in terms of cost behavior (fixed vs. variable). Scenario A, NSEF pays Gibbs a $100,000 fee: Scenario B, NSEF pays Gibbs 50% of revenue: b. Compute the budgeted income (assuming there are no other expenses) under each of the following scenarios: 1) NSEF agrees to pay the $100,000 fee, and 350 guests actually attend the seminar, and 2) NSEF pays Mr. Gibbs 50% of revenue, and 350 guests attend the seminar. c. For each scenario ($100,000 fee vs. 50% of revenue), compute the percentage increase in profit that would result if the Foundation is able to increase attendance by 20 percent over the original plan (to a total of 420). d. For each scenario, compute NSEF's cost per contributor if 350 attend and if 420 contributors attend. Required A Required B Required C Required D Classify the two offers in terms of cost behavior (fixed vs. variable). Scenario A, NSEF pays Gibbs a $100,000 fee: Scenario B, NSEP pays Gibbs 50% of revenue: Scenario A, NSEF pays Gibbs a $100,000 fee Scenario B, NSEF pays Gibbs 50% of revenue Former NFL coach Joe Gibbs is highly sought after as a guest speaker. His fee can run as high as $150,000 for a single two- hour appearance. Recently, he was asked to speak at a seminar offered by the National Sports in Education Foundation (NSEF). Due to the charitable nature of the organization, Mr. Gibbs offered to speak for $100,000, NSEF planned to invite 350 guests who would each make a $500 contribution to the organization. The Foundation's executive director was concerned about committing so much of the organization's cash to this one event. So instead of the $100,000 fee she countered with an offer to pay Mr. Gibbs 50% of the revenue received from the seminar and no other payments. Required a. Classify the two offers in terms of cost behavior (fixed vs. variable). Scenario A, NSEF pays Gibbs a $100,000 fee: Scenario B, NSEF pays Gibbs 50% of revenue: b. Compute the budgeted income (assuming there are no other expenses) under each of the following scenarios: 1) NSEF agrees to pay the $100,000 fee, and 350 guests actually attend the seminar, and 2) NSEF pays Mr. Gibbs 50% of revenue, and 350 guests attend the seminar. c. For each scenario ($100,000 fee vs. 50% of revenue), compute the percentage increase in profit that would result if the Foundation is able to increase attendance by 20 percent over the original plan (to a total of 420). d. For each scenario, compute NSEF's cost per contributor if 350 attend and if 420 contributors attend. Required A Required B Required C Required D Classify the two offers in terms of cost behavior (fixed vs. variable). Scenario A, NSEF pays Gibbs a $100,000 fee: Scenario B, NSEP pays Gibbs 50% of revenue: Scenario A, NSEF pays Gibbs a $100,000 fee Scenario B, NSEF pays Gibbs 50% of revenue
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ANSWER a The cost behavior of Scenario A is fixed as the organization would pay a predetermined amou... View the full answer
Related Book For
Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett
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