ALLTEL Pavilion is operated by SFX Entertainment in an outdoor atmosphere for its customers. ALLTEL attempts to create a competitive advantage as the major outdoor concert venue in the "Triangle" area of North Carolina consisting of Raleigh, Durham, and Chapel Hill. The amphitheater has art-like acoustics and video differentiating the venue with trying to keep costs budgeted for each concert. The Key Performance Indicators are based on advertising media. They have researched on the most effective advertising in each region of the state in order to maximize ticket sales with the least advertising costs, which eventually create profitability. Other items include customer satisfaction, parking, and concessions.
2.) Complete two selected cost-volume-profit analyses for the show illustrated in Exhibit 2, the KFBS Allstars:
A. How many tickets must the ALLTEL Pavilion sell to break even?
(Hint: don't ignore the possibility that the attendance of Comp ticket holders affects the concert's profitability.). (4:1 sales mix tickets of paying : comp) Break-Even = $0 = 4x($40.08-$3.05) + 1x($13.09-$3.05) - $263,245 x = 1664.42 sales mix packages 1(1664.42) = 1665 comp tickets 4(1664.42) = 6658 paying tickets = 8323 total tickets i.) Do you think that it is likely that the Pavilion will break even? Briefly explain. Yes, ALLTEL will likely break even. To make a profit ALLTEL has to sell over 8323 total tickets with the projected number of sales tickets is 10,349 total. ii.) Given your estimated breakeven point in units, compute the Margin of Safety (MOS) in units. Briefly comment on the MOS result. MOS units = #of total tickets - # of Break Even Tickets MOS units = 10,349... [continues]
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