Purpose of Assignment
The case study focuses on break-even margin of safety and incremental analysis and allows students to experience working through a business scenario to apply these tools in managerial decision making. Students are required to make decisions and provide solutions based on their evaluation of financial data.
Assignment Steps
Resources:Generally Accepted Accounting Principles (GAAP) U.S. Securities and Exchange Committee (SEC)
Tutorial help on Exceland Word functions can be found on the MicrosoftOffice website. There are also additional tutorials via the web offering support for Office products.
Scenario:Shelley Jones has just been elected as president of the Circular Club of Auburn Kansas and she has been asked to suggest a new fundraising activity for the club. After a considerable amount of research Shelley proposed the Circular Club sponsor a professional rodeo. In her presentation to the club Shelley recommends the fundraiser become an annual activity with the following goals:
Shelley’s goal in the first year is to have an activity that would become an annual community event and would break even the first year and raise $5000 the following year. In addition based on the experience of other communities Shelley believed a rodeo could grow in popularity so the club would eventually earn an average of $20000 annually.
A rodeo committee was formed. Shelley contacted the world’s oldest and largest rodeo-sanctioning agency to apply to sponsor a professional rodeo. The sanctioning agency requires a rodeo to consist of the following five events: Bareback Riding Bronco Riding Steer Wrestling Bull Riding and Calf Roping Team Roping and Women’s Barrels. Prize money in the amount of $3000 would be paid to winners in each of the seven events. Members of the rodeo committee contracted with RJ Cattle Company a livestock contractor on the rodeo circuit to provide bucking stock fencing and chutes. Realizing costs associated with the rodeo were tremendous and ticket sales would probably not be sufficient to cover the costs the rodeo committee sent letters to local businesses soliciting contributions in exchange for various sponsorships. Exhibiting Sponsorships are $1000 to exhibit products or services while Major Sponsorships are $600 and Chute Sponsorships are $500 to have the name of the sponsor’s business on one of the six bucking chutes. For a contribution of $100 individual sponsors will be included in a Friends of Rodeo list found in the rodeo programs.
A local youth group will be contacted to provide concessions to the public and divide the profits with the Circular Club. The Auburn Circular Club Pro Rodeo Roundup will be held on June 1 2 and 3. The cost of an adult ticket is set at $8 in advance or $10 at the gate; the cost of a ticket for a child 12 or younger is set at $6 in advance or $8 at the gate. Tickets are not date-specific. Rather one ticket will admit an individual to one performance of his or her choice– Friday Saturday or Sunday. The rodeo committee is able to secure a location through the county supervisors’ board at a nominal cost to the Circular Club. The arrangement allows for the use of the county fair grounds and arena for a one-week period. Several months prior to the rodeo members of the rodeo committee were notified the bleachers at the arena would hold 2500 patrons. On Saturday night paid attendance was 1663 but all seats were filled due to poor gate controls. Attendance was 898 Friday and 769 on Sunday.
The following revenue and expense figures relate to the first year of the rodeo.
Receipts
Contributions from sponsors $22000
Receipts from ticket sales $28971
Share of concession profits $1513
Sale of programs$600
Total receipts $53084
Expenses
Livestock contractor $26000
Prize money $21000
Contestant hospitality $3341*
Sponsor signs for arena $1900
Insurance $1800
Ticket printing $1050
Sanctioning fees $925
Entertainment $859
Judging fees $750
Port-a-potties $716
Rent $600
Hay for horses $538
Programs $500
Western hats to first 500 children $450
Hotel rooms for stock contractor $325
Utilities $300
Sand for arena $251
Miscellaneous fixed costs$105
Total expenses$61410
Net loss $ (8326)
*The club contracted with a local caterer to provide a tent and food for the contestants. The cost of the food was contingent on the number of contestants each evening. Information concerning the number of contestants and the costs incurred are as follows:
ContestantsTotal Cost
Friday 68 $998
Saturday 96 $1243
Sunday 83 $1100
$3341
On Wednesday after the rodeo members of the rodeo committee met to discuss and critique the rodeo. Jonathan Edmunds CPA and President of the Circular Club commented that the club did not lose money. Rather Jonathan said The club made an investment in the rodeo. The rodeo committee has requested an analysis of the rodeos performance and evaluation of the CPA’s review.
Createa minimum 10-slide presentation including detailed speaker notes as the committee’s consultation team and respond to the following:
Showyour work in MicrosoftWord or Excel.
Completecalculations/computations using MicrosoftWord or Excel.
Formatthe assignment consistent with APA guidelines.