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 …show more content…
A. What is the maximum fixed fee that the Pavilion can pay the KFBS Allstars if the Pavilion wants to earn $45,000 operating income after 40 percent tax and still expects the show to have an average ticket price of $22.12? Assume the show is expected to draw 6,000 paying ticket holders.
$45,000 / (1 0.40) = [ ($40.08 - $3.05) * 6,000 ] + [ ($13.09 - $3.05) * (1/4) * 6,000 ] $102,610 X $75,000 = $222,180 + $15,060 - $102,610 X X = $59,630 talent fixed fee With a low ticket sales of 6,000 the ALLTEL pavilion cannot pay more than a $59,630 fixed fee for the performer of they will have to figure our another way to create profitability.
B. What is the maximum fixed fee that the Pavilion can pay KFBS Allstars if the Pavilion wants to earn $45,000 operating income after 40 percent tax and still expects