8.19 CVP, cost structure differences, movie production. (20 min) 1 a Contract A Fixed costs for Contract A Production costs €21,000,000 Fixed salary 15,000,000 Total fixed costs €36,000,000 Unit variable cost = €0.25 per €1 revenue marketing fee Unit contribution margin = €0.75 per €1 revenue Box-office receipts of €76,800,000 translate to €48,000,000 in revenues to Espasso. 2 [AQ8] b Contract B Fixed costs for Contract B Production costs €21,000,000 Fixed salary 3,000,000 Total fixed costs €24,000,000 Unit variable cost = €0.25 per €1 revenue fee to Artes e Media €0.15 per €1 revenue residual to director/actors €0.40 per €1 revenue Unit contribution margin = €0.60 per €1 revenue Breakeven points in revenues = €24,000,000 €0.60 = €40,000,000 Box-office receipts of €64,000,000 translate to €40,000,000 in revenues to Espasso.
Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5 th Edition, Instructor’s Manual © Pearson Education Limited 2012 Share with your friends: |