Do you think it was necessary for Marsha Smith to stipulate that she wanted a fundraiser that would (1) continue to get better each year, (2) give back to the community, and (3) provide the club a presence in the community? Why or why not?

Ans. This approach of Marsha was effective because club has to follow the fundraising activities because this would generate revenue for the club on annual basis and also provide then some profit after cover its all expenses. This activity was effective for the club to make a strong reputation in the community and also effect on the rodeo  that would became popular due to good image of the club and club could manage all its expenses and also earn profit on annual basis. Fundraising activities was play important role for the success of club in the community.

2. What did Jonathan Edmunds mean when he said the club had made an investment in the

rodeo?

Ans. Jonathan means that the Club was became famous for the rodeo and it might earn revenue according to estimation which would increase annually and give profit for all the partners of the club. Further the demand of rodeo and its fame in the community would provide more benefit to the club. So according to Jonathan, club had made an investment in the rodeo that provide them revenue in the upcoming years and due to increase in demand of rodeo , the earning of the club would be increase on annual basis due to its fundraising activity and the held of rodeo activity.

3. Is Jonathan’s comment concerning the investment consistent with Marsha’s idea that the

club should have a fundraiser that would (1) continue to get better each year, (2) give back to

the community, and (3) provide the club a presence in the community? Why or why not?

Ans. Yes the comment of Jonathan is related to the idea of Marshal that belong improvement and profitable act for the club. Marshal wanted to increase the revenue of the club because they want to generate more profit and also beneficial for the club in long terms and the reputation of the club also increase because when many activities are became part of club and club would generate earning and its image was also improved when the more people came for watching the rodeo and all the people attach with the rodeo also help to increased the demand of the club and its membership.

4. What do you believe is the behavior of the rodeo expenditures in relation to ticket sales?

Ans. According to given data, the expenses of the rodeo are high as compare to its sales because it’s all expenses cover all the major parts related to rodeo and its ticket sales are almost 1/3 part of its expenses. So the only ticket sales never cover its all expenses but it need further revenues like sponsor contribution and share of concession profit. Because there are many expenses that must be occur for the rodeo and its all the expenses are important to held the rodeo for the club. But only ticket sales never cover its all expenses.

5. Determine the fixed and variable cost components of the catering costs using the high-low

Method.

Ans. According to high low method, the fixed and variable costs of the rodeo are fluctuate with different components. Its fixed cost is only 105 but its remaining expenses are sand of arena, utilities, hotel room for stock, western hats to first 500 children, programs, hay for horses, port a potties, judging fees, entertainment, sanctioning fees, ticket printing, sponsors sign of arena, contest hospitality, prize money, and live stock contract. Its rent is including fixed cost because it never change with any additional or decrease of any element. These variable costs are fluctuate according to different activities of the rodeo that can change the value of variable cost according to requirement. 

6. Assume you are elected chair of the rodeo committee for next year. What steps would you

suggest the committee take to make the rodeo profitable?

Ans. Me as a elected chair of the rodeo committee want to enhance the level of rodeo. Effective livestock must be held in reasonable prices. It’s all the variable and fixed expenses must be occurring at manageable level. Further the marketing and advertisement of the rodeo would be increased so its tickets sales must be cover its expenses because its expenses are very high as compare to its tickets prices. And its ticket prizes will have to cover its all expenses and it would happen only when its promotion is high and more people willing to purchase the ticket of the rodeo.

7. Marsha, Jonathan, and Adrian Stein, the Fundraising Chairperson, are beginning to make

plans for next year’s rodeo. Marsha believes that by negotiating with local feed stores,

innkeepers, and other business owners, costs can be cut dramatically. Jonathan agrees. After

carefully analyzing costs, Jonathan has estimated that the fixed expenses can be pared to

approximately $51,000. In addition, Jonathan estimates that variable costs are 4% of total gross

receipts.

After talking with business owners who attended the rodeo, Adrian is confident that funds

solicited from sponsors will increase. Adrian is comfortable in budgeting revenue from sponsors

at $25,600. The local youth group is unwilling to provide concessions to the audience unless

they receive all of the profits. Not having the personnel to staff the concession booth, members

of the Founders Club reluctantly agree to let the youth group have 100% of the profits from the

concessions. In addition, members of the rodeo committee, recognizing that the net income

from programs was only $100, decide not to sell rodeo programs next year. Compute the

break-even point in dollars of ticket sales assuming Adrian and Jonathan are correct in their

assumptions.

Ans. Fixed expenses= $51000

Variable cost= 4%

Revenue from sponsors= $25600

Net income from program= $100

Total revenue= $25700

Variable cost= $1028

Breakeven point= 51000(25700-1028) = 2.06

8. Marsha has just learned that you are calculating the break-even point in dollars of ticket

sales. She is still convinced that the Club can make a profit using the assumptions in number 7

above.

(a)   Calculate the dollars of ticket sales needed in order to earn a target profit of $6,000.

Sol: profit=$6000

Variable cost= $1028

Fixed cost = $51000

Sales=?

Sales =profit+variable cost+fixed cost

Sales= $58028

 (b) Calculate the dollars of ticket sales needed in order to earn a target profit of $12,000.

Sol:

profit=$12000

Variable cost= $1028

Fixed cost = $51000

Sales=?

Sales =profit+variable cost+fixed cost

Sale= 12000+1028+51000=$64028

9. Are the facilities at the fairgrounds adequate to handle crowds needed to generate ticket

Revenues calculated in number 8 above to earn a $6,000 profit? Show calculations to support

Your answers.

Ans.  Profit= $6000

The facilities for the fairground are not enough to handle the crowd because the crowd is more than limit. The actual patrons =2500. So on Friday attendance must be 1248, on Saturday 674 and on Sunday 577 according to limit of ground. The revenue of ticket is 58028 to earn the profit of $6000 and these patrons must be follow according to three days of rodeo. So the revenue of ticket should be double to handle the entire fairground according to requirement.