Taos Museum of Southwestern Arts and Crafts Case Solution
1 Financial Management For Public, Health, And Not-For-Profit Organizations, 7th Ed. © Sage CQ 2023
Q1: Break Even Quantity Inputs Grant Revenue Memberships - Number Average Member Donation Membership Revenue Fixed Expenses Cost per Handout Utility Cost per visitor Cost per Tour Tape % of people who take Tour Tapes Cost per Handout % of Visitors Who Will Buy at Gift Shop Average Gift-Shop Purchase Cost of Goods Sold as % of revenue Total Annual Visitors Type of Visitor
Regular Group Senior Citizen Student
$
564,000 1,255 $125 $ 156,875 $ 1,125,000 $ 0.75 $ 0.25 $ 3.00 30% $ 1.25 5% $ 40.00 75% 80,000 % of Total
65% 15% 10% 10%
Price
$ $ $ $
10.00 6.00 5.00 2.00
Financial Management For Public, Health, And Not-For-Profit Organizations, 7th Ed. © Sage CQ 2023
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Q1: Break Even Quantity
Fixed Costs, Variable Costs and Variable Revenue Net Fixed Costs
Gross Fixed Costs Less: Grant Revenue Less: Membership Fees Net Fixed Cost (FC)
$ 1,125,000 (564,000) (156,875) $
404,125
Variable Costs per Visitor
Tour Tapes $ % of People Taking Tour Tapes Tour Tape Cost per Person $ Handouts Electricity Total Variable Cost (VC) $
3.00 30% 0.90 1.25
30% x Cost per Tour Tape
0.25 2.40
Weighted Variable Revenue Type of Visitor
% of Total
Regular Group Senior Citizen Student Weighted Variable Revenue (VR)
65% 15% 10% 10%
Price
$ $ $ $
10.00 6.00 5.00 2.00
$ $ $ $ $
Weighted Average
6.50 0.90 0.50 0.20 8.10
Financial Management For Public, Health, And Not-For-Profit Organizations, 7th Ed. © Sage CQ 2023
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Q1: Break Even Quantity
BEQ =
Fixed Cost - Fixed Revenues -----------------------------------------Variable revenue - Variable Cost
BEQ =
$404,125 -------------$8.10-$2.40
BEQ=
70,899.12
70,900 Visitors 4
Financial Management For Public, Health, And Not-For-Profit Organizations, 7th Ed. © Sage CQ 2023
Q2: Quarterly Budget Quarter 1
Revenue Visitor Revenue $ Membership Revenue Grant Revenue Gift Shop Revenue Total Revenue $ Expenses Fixed Costs $ Variable Operating Costs Cost of Goods - Gift Shop Total Expenses $ Surplus/(Deficit)
$
Quarter 2
97,200 $ 162,000 $ 62,750 31,375 141,000 282,000 300,950 $
Quarter 3
Quarter 4
Full Year
291,600 $ 31,375 56,400
97,200 $ 648,000 31,375 156,875 84,600 564,000
40,000
72,000
24,000
515,375 $
451,375 $
237,175 $ 1,504,875
136,000
281,250 $ 281,250 $ 28,800 48,000 30,000
281,250 $ 281,250 $ 1,125,000 86,400 28,800 192,000 54,000 18,000 102,000
310,050 $
359,250 $
421,650 $
328,050 $ 1,419,000
(9,100) $
156,125 $
29,725 $
(90,875) $
Financial Management For Public, Health, And Not-For-Profit Organizations, 7th Ed. © Sage CQ 2023
85,875
5