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• Contact –
• MAC4862@unisa.ac.za
• MAC4861@unisa.ac.za
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2019/05/23
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2019/05/23
All-round entertainers
• ARE specializes in a number of entertainment fields, including
organizing of rock concerts featuring international artists. Other
activities include hosting road shows for artists and performing
normal agent activities. ARE has grown to a household name and
the public looks forward to the annual concert called the “Big
Show”. The venues for these concerts are leased as and when
required. The Operations Manager for ARE is currently planning the
Big Show for the year to be held at Loftus Versfeld stadium (home
of the Blue Bulls) on the evening before the Currie Cup rugby final.
The concert is said to showcase some of South Africa’s best local
talent and a world renowned Irish band.
•
• Thanks to the latest technology and big screens all over the
stadium, all tickets in the stands can be sold at one price. In
addition to the “Stand” tickets there will also be “VIP” tickets for
those seated in front of the stage and in VIP boxes.
All-round entertainers
• Early indications are that the bands will require
R22 000 000 appearance fees, which will include the
rights to sell official merchandise at the venue.
Currently the venue hire is still under negotiation. As
the rugby teams who will be playing in the final are not
yet decided, the venue hire is still not contracted.
Should the Blue Bulls reach the final, the Blue Bulls
Rugby Union (BBRU) have agreed to pay 10% of the
venue hire as they will reap future benefits from the
marketing of the concert. Should the Blue Bulls not
reach the final the BBRU are obligated to contribute
5% of the venue hire. Currently betting sites have the
Blue Bulls at a 40% probability to reach the final.
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2019/05/23
All-round entertainers
• The venue hire without any discounts is
R2 600 000. ARE has decided to use their own
personnel to clean the venue after the concert,
even though BBRU offered to clean the venue for
R50 000. ARE offered 30 members of their staff,
plus one friend or partner R200 each per hour to
clean up the venue. BBRU indicated that the
venue must be cleaned within 4 hours. ARE
decided to sell the rights for the sale of
refreshments at the venue to another local
company for R250 000 as part of their community
engagement initiative.
All-round entertainers
The operations manager has made the following estimates per person attending
the concert:
Stand VIP
R R
Ticket price per person 650,00 980,00
Security services 50,00 50,00
Park and ride facilities 0,00 50,00
Drink and meal voucher 0,00 98,00
Other budgeted fixed overheads relating to the Big Show are R3 800 000.
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2019/05/23
All-round entertainers
All-round entertainers
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2019/05/23
All-round entertainers
REQUIRED Marks
(a) Calculate the breakeven (in total only) in terms of number of (13)
people attending the Big Show.
Solution
Step 1:
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2019/05/23
Solution
Step 2:
Contribution per unit
Solution
Step 3:
Weighted average contribution per unit
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Solution
Step 4: BEP calc
Must round UP.