a) Dharma Productions organises movie productions. For an upcoming red carpet evening, the company is selling tickets at $60 per person at a large theatre which has a capacity of 10,000 people. Each attendant is expected to buy $12 of food and merchandise at the film evening. The cost of providing the food and merchandise is estimated to be $5 per person. All other ancillary services will be provided by the theatre owner. Initial analysis indicates that the ancillary cost of providing food and merchandise, as well as the staff needed to handle ticket sales, may be described as a semi-variable cost. Data on these costs and tickets sold from three similar events held at the venue have been collected and are tabulated below:

Tickets sold	Cost ($)
2100	6640
3824	11284
4650	13525

Use the high-low method to estimate the total cost function relating to these ancillary costs.

b) Dharma Productions will be renting the theatre which will host the upcoming red carpet evening. The budgeted fixed cost of both renting the theatre and paying the staff is budgeted to total $8,000. In addition, a TV entertainment channel will be paying Dharma Productions $10,000 for the right to record and sell DVDs of the evening’s highlights.

Calculate the number of tickets needed to be sold for Dharma Productions to earn an expected $90,000 profit from the comedy evening.

c) Dharma Productions is organising a large all-day awards show with three different types of ticket: ‘Adult’, ‘Child’ and ‘Family’. These different ticket types are sold at different prices, and allow ticket holders different seating options and entitlements (e.g. in-seat commentary, Wi-Fi access). The prices and variable costs associated with each ticket type are given below:

Ticket type	Selling price ($)	Variable cost ($)
Adult	80	50
Child	30	20
Family	190	170

Past experience has indicated that the mix of tickets sold for similar events has been 70% (Adult), 20% (Child) and 10% (Family). Dharma Productions will be hiring an expo centre with a huge hall to accommodate a total capacity of 100,000 people. The company will be charged a fixed cost totalling $1.8m for use of the facilities. No other costs are anticipated by the management of Dharma Productions.

Calculate the number of tickets of each type that will allow Dharma Productions to break even on its planned Awards Show.

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P7.9 Translated/Remeasured Trial Balances On January 1, 2019, the U.K. subsidiary of U.S. Intema- tional Corporation had the following condensed balance sheet, in pounds sterling (in millions): Assets Cash and receivables.... Inventory (FIFO).. Plant assets.. Accumulated depreciation Total assets.... Llabilitles and equlty Accounts payable... Long-term debt... Equity ... £2,000 2,200 1,600 £2,100 1,200 2,100 (400) £5,400 Total lilabilities and equity....... £5,400 The exchange rate on January 1, 2019 was $1.20/£. Inventory at January 1 was purchased when the ex- change rate was $1.18/£. Plant assets at January 1 were acquired when the exchange rate was $1.80/£. Plant assets costing £200 million were purchased when the exchange rate was $1.22/£. Depreciation of £50 was taken on these plant assets in 2019. At the end of 2019, the subsidiary reported the following trial balance: (In millons) Dr (Cr) Cash and receivables.. Inventory (FIFO). Plant assets £2,660 2,500 1,800 (560) (2,200) (1,100) (2,100) (4,000) 2,000 160 840 Accumulated depreciation Accounts payable.. Long-term debt. Equity, January 1 Sales.... Cost of goods sold Depreciation expense. Other operating expenses Total .... £ 0 The ending inventory was purchased when the exchange rate was $1.28/£. Sales and other operating expenses occurred evenly over the year. At year-end, the exchange rate was $1.30/£; the average for the year was $1.25/£. Required a. Prepare the remeasured December 31, 2019 trial balance of the U.K. subsidiary, assuming the U.S. dollar is the functional currency of the subsidiary. Assume the remeasured balance of equity on Janu- ary 1, 2019 was $3,196 million. Prepare a schedule to calculate the remeasurement gain or loss for 2019. b. Repeat part a, assuming the pound is the functional currency of the subsidiary. Assume the translated balance of equity on January 1, 2019, is $2,520 million. Prepare a schedule to calculate the transla- tion gain or loss for 2019. P7.9 Translated/Remeasured Trial Balances On January 1, 2019, the U.K. subsidiary of U.S. Intema- tional Corporation had the following condensed balance sheet, in pounds sterling (in millions): Assets Cash and receivables.... Inventory (FIFO).. Plant assets.. Accumulated depreciation Total assets.... Llabilitles and equlty Accounts payable... Long-term debt... Equity ... £2,000 2,200 1,600 £2,100 1,200 2,100 (400) £5,400 Total lilabilities and equity....... £5,400 The exchange rate on January 1, 2019 was $1.20/£. Inventory at January 1 was purchased when the ex- change rate was $1.18/£. Plant assets at January 1 were acquired when the exchange rate was $1.80/£. Plant assets costing £200 million were purchased when the exchange rate was $1.22/£. Depreciation of £50 was taken on these plant assets in 2019. At the end of 2019, the subsidiary reported the following trial balance: (In millons) Dr (Cr) Cash and receivables.. Inventory (FIFO). Plant assets £2,660 2,500 1,800 (560) (2,200) (1,100) (2,100) (4,000) 2,000 160 840 Accumulated depreciation Accounts payable.. Long-term debt. Equity, January 1 Sales.... Cost of goods sold Depreciation expense. Other operating expenses Total .... £ 0 The ending inventory was purchased when the exchange rate was $1.28/£. Sales and other operating expenses occurred evenly over the year. At year-end, the exchange rate was $1.30/£; the average for the year was $1.25/£. Required a. Prepare the remeasured December 31, 2019 trial balance of the U.K. subsidiary, assuming the U.S. dollar is the functional currency of the subsidiary. Assume the remeasured balance of equity on Janu- ary 1, 2019 was $3,196 million. Prepare a schedule to calculate the remeasurement gain or loss for 2019. b. Repeat part a, assuming the pound is the functional currency of the subsidiary. Assume the translated balance of equity on January 1, 2019, is $2,520 million. Prepare a schedule to calculate the transla- tion gain or loss for 2019.

Answer rating: 100% (QA)

Solution Variable Cost using highlow method Variable Cost Cost at highest level of activity Cost at ... View the full answer