Twigs Tickets Limited operates three theatres in major cities of South Africa. The company was established...

 

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Twigs Tickets Limited operates three theatres in major cities of South Africa. The company was established in 2016, by a group of theatre enthusiasts. The first theatre was opened in Johannesburg, and following the success of this, lead to the opening of a further 2 theatres over the next 4 years. Patrons are offered very high- quality performances. Key business facts - Twigs Tickets Limited: patron attendance has been slowly declining the company uses independent contractors (who are paid a fixed amount per show) to write and produce theatrical productions annually the company uses its own directors for casting, music and choreography musicians and artists are contracted for the duration of any given show refreshments and snacks are available for sale at all venues. Budget to actual financial results of Twigs Tickets Limited for the year ended 31 March 2021, as well as the draft budget for the 2021/22 year are summarised below: Statement of profit or loss for the year ended 31 March 2021: Revenue Ticket sales Beverage sales Cost of sales Ticketing agent commission Contractor fees Beverage costs New show stage props Musician and artist fees Overheads Depreciation Marketing costs Salaries and wages Rental of premises Travelling and accommodation Utility costs Other fixed overheads Profit from operations Net interest income (costs) Profit before taxation Notes 1 1 2 3 4 5 Budget 2021 R'000 18 408 16 068 2340 (3 744) (624) (936) (1 092) (468) (624) (7 956) (624) (624) (2 028) (2808) (780) (468) (624) 6 708 780 7 488 Actual 2021 R'000 18 051 15 485 2 566 (3 903) (627) (780) (1 248) (468) (780) (8 502) (468) (780) (2 340) (2808) (624) (702) (780) 5646 780 6 426 Budget 2022 R'000 22 442 19 428 3014 (4 524) (624) (1 092) (1 248) (780) (780) (9 672) (780) (936) (2 184) (3 120) (936) (936) (780) 8 246 (780) 7466 Additional information: i. One new theatre is scheduled for opening on 21 December 2021. The budget and actual attendance statistics are presented below: September year-end Actual 2021 Budget 2021 289 100 Budget 2022 342 563 No. of tickets sold Trading weeks at each theatre 52 52 Theatres open and trading for the year 3 3 4 Number of shows per week at each theatre 5 5 Maximum number of tickets available for sale 339 132 315 060 393 412 Average ticket price 55.58 58.12 56.71 ii. Tickets to shows are sold both directly and through an independent ticketing agent. Commission of 6.5 % of the ticket face value is paid on independent agent ticket sales. Total direct and independent ticketing agent sales are as follows: September year-end Budget 2021 Actual 2021 Budget 2022 Direct ticket sales 163 800 129 792 140 400 Ticketing agent sales 125 300 136 655 202 163 Total tickets sold 289 100 266 447 342 563 iii. Sound equipment and furniture and fittings are depreciated over a period of 10 years. The anticipated increase in 2022 is due to the opening of the new theatre. Required: 4.1. Critically analyse the actual results of Twigs Tickets for the year ended 31 March 2021 and compare the results against budget. Your answer should include: ● Computations of key ratios and variances by completing the grey shaded cells in the table provided in your answer book. You are comparing Actual 2021 against budgeted for 2021: Variance % = (Actual 2021 - Budgeted 2021) Budgeted 2021 x 100 ● Commentary on major variances between budget and actual figures. 4.2. Review the budget attendance statistics and ticket revenue for the period ending 31 March 2022. Complete the grey shaded cells in the table provided in your answer book. You are comparing Budgeted for 2022 against Actual for 2021: Variance % = (Budgeted 2022 - Actual 2021) Actual 2021 x 100 Provide an explanation for the increase in budgeted ticket revenue. 266 447 52 Twigs Tickets Limited operates three theatres in major cities of South Africa. The company was established in 2016, by a group of theatre enthusiasts. The first theatre was opened in Johannesburg, and following the success of this, lead to the opening of a further 2 theatres over the next 4 years. Patrons are offered very high- quality performances. Key business facts - Twigs Tickets Limited: patron attendance has been slowly declining the company uses independent contractors (who are paid a fixed amount per show) to write and produce theatrical productions annually the company uses its own directors for casting, music and choreography musicians and artists are contracted for the duration of any given show refreshments and snacks are available for sale at all venues. Budget to actual financial results of Twigs Tickets Limited for the year ended 31 March 2021, as well as the draft budget for the 2021/22 year are summarised below: Statement of profit or loss for the year ended 31 March 2021: Revenue Ticket sales Beverage sales Cost of sales Ticketing agent commission Contractor fees Beverage costs New show stage props Musician and artist fees Overheads Depreciation Marketing costs Salaries and wages Rental of premises Travelling and accommodation Utility costs Other fixed overheads Profit from operations Net interest income (costs) Profit before taxation Notes 1 1 2 3 4 5 Budget 2021 R'000 18 408 16 068 2340 (3 744) (624) (936) (1 092) (468) (624) (7 956) (624) (624) (2 028) (2808) (780) (468) (624) 6 708 780 7 488 Actual 2021 R'000 18 051 15 485 2 566 (3 903) (627) (780) (1 248) (468) (780) (8 502) (468) (780) (2 340) (2808) (624) (702) (780) 5646 780 6 426 Budget 2022 R'000 22 442 19 428 3014 (4 524) (624) (1 092) (1 248) (780) (780) (9 672) (780) (936) (2 184) (3 120) (936) (936) (780) 8 246 (780) 7466 Additional information: i. One new theatre is scheduled for opening on 21 December 2021. The budget and actual attendance statistics are presented below: September year-end Actual 2021 Budget 2021 289 100 Budget 2022 342 563 No. of tickets sold Trading weeks at each theatre 52 52 Theatres open and trading for the year 3 3 4 Number of shows per week at each theatre 5 5 Maximum number of tickets available for sale 339 132 315 060 393 412 Average ticket price 55.58 58.12 56.71 ii. Tickets to shows are sold both directly and through an independent ticketing agent. Commission of 6.5 % of the ticket face value is paid on independent agent ticket sales. Total direct and independent ticketing agent sales are as follows: September year-end Budget 2021 Actual 2021 Budget 2022 Direct ticket sales 163 800 129 792 140 400 Ticketing agent sales 125 300 136 655 202 163 Total tickets sold 289 100 266 447 342 563 iii. Sound equipment and furniture and fittings are depreciated over a period of 10 years. The anticipated increase in 2022 is due to the opening of the new theatre. Required: 4.1. Critically analyse the actual results of Twigs Tickets for the year ended 31 March 2021 and compare the results against budget. Your answer should include: ● Computations of key ratios and variances by completing the grey shaded cells in the table provided in your answer book. You are comparing Actual 2021 against budgeted for 2021: Variance % = (Actual 2021 - Budgeted 2021) Budgeted 2021 x 100 ● Commentary on major variances between budget and actual figures. 4.2. Review the budget attendance statistics and ticket revenue for the period ending 31 March 2022. Complete the grey shaded cells in the table provided in your answer book. You are comparing Budgeted for 2022 against Actual for 2021: Variance % = (Budgeted 2022 - Actual 2021) Actual 2021 x 100 Provide an explanation for the increase in budgeted ticket revenue. 266 447 52

Answer rating: 100% (QA)

41 Computations of key ratios and variances Budgeted 2021 R000 Actual 2021 R000 Revenue 18 051 18 408 Ticket sales 15 485 16 068 Beverage sales 2 566 2 340 Cost of sales 3 903 3 744 Ticketing agent co... View the full answer