Financial Analysis & Break-Even Calculations

This assignment delves into the crucial aspects of financial analysis for businesses. It covers key concepts such as Contribution Margin Ratio (CMR) and Break-Even Point calculations. The provided figures demonstrate how to determine the CMR, calculate both units and sales at the break-even point, analyze target net income requirements, and assess rates of return on sales. The assignment also explores the impact of tax rates on net income after taxes.

Running head: INTRODUCTION TO EVENT MANAGEMENT
Introduction to Event Management
Name of the Student
Name of the University
Authors Note
Course ID

Running head: INTRODUCTION TO EVENT MANAGEMENT
Table of Contents
Explanation of the Assumptions:...............................................................................................2
Budgeted Income:......................................................................................................................4
Break-even analysis:..................................................................................................................4
Reference List:...........................................................................................................................8

Running head: INTRODUCTION TO EVENT MANAGEMENT
Explanation of the Assumptions:
The explanations to the assumptions follows that the revenue derived from the
occasion with little amount of overhead. This provides the occasion with the speedy break-
even point with little amount of overhead (Akintoye, 2014). Prior to arriving at the net profit
tax rates are taken into the considerations for information. The event will not carry any loan
burden which would be effected by the rate of tax.
An event planning requires the use of the resources that are available at lower cost. As
it has been noted in the below stated table the event is anticipating to spend less on the
overhead instead of the other event planners with an outside office or with an office space in
their own facility (Johansson & Siverbo, 2014). The budgetary plans have been made to
allow the event company to spend their fund in a creative manner along with the expansion in
the areas with appropriate opportunity.
The anticipated net profit situation of the event is considered to be better as the
sponsors, merchandise sale and vendors made up the profit of the event (Veal & Burton,
2015). The event is operating with no amount of debt and this will help in increasing the net
worth higher.
Summary of Profit/Loss
Estimated
Total Income $ 2,58,750.00
Total Expenses $ 1,29,700.00
Gross Profit $ 1,29,050.00
Tax: 29% $ 37,424.50
Net Profit $ 91,625.50
Budgeted Expenditure:
Expenses
Site Estimated Entertainment Estimated
Room / hall fees $ 5,000.00 Performers $ 5,000.00

Running head: INTRODUCTION TO EVENT MANAGEMENT
Site staff $ 1,250.00 Speakers $ 1,750.00
Equipment $ 20,000.00 Travel $ 3,000.00
Tables and chairs $ 3,500.00 Kick-off Event $ 3,250.00
$ 29,750.00 $ 13,000.00
Refreshments Decorations
Food $ 35,000.00 Flowers $ 500.00
Drinks $ 17,500.00 Candles $ 250.00
Linens $ 2,500.00 Lighting $ 750.00
Staff / gratuities $ 1,500.00 Balloons $ 150.00
$ 56,500.00 Paper supplies $ 450.00
Publicity $ 2,100.00
Graphics work $ 3,250.00 Miscellaneous
Photocopying / Printing $ 2,250.00 Transportation $ 1,500.00
Postage $ 1,200.00 Photocopying $ 100.00
$ 6,700.00 Postage $ 800.00
Prizes Stationery supplies $ 120.00
Ribbons / Plaques $ 1,000.00 Fax services $ 130.00
Gifts $ 18,000.00 $ 2,650.00
$ 19,000.00
Total Expenses $1,29,700.00
The budget for operations comprises of all the non-capital revenues and expenditures.
The forecast is based on the information derived from the other music concert. The forecast
made are merged with the unrestricted forecast of the budget and the same is adjusted with
the event budget forecast for the purpose of consistency (Klychova et al., 2014). As indicated
from the current projected budget, the consolidated budget operations comprise of the
numerous types of revenues and expenditure. It can be considered in relation to the event
administrative areas as described in this section along with the type of fund.
The expenses categorized in this budget represents site expenditure, expenditure on
refreshments, publicity and prize distribution expenditure (Otley, 2015). Additionally,
expenses are also incurred in the areas of entertainment, Decorations and other miscellaneous
expenses comprises of the cost on photocopying, postage, stationary supplies and fax service.
The income streams which will form the source of revenue from the budget, the
admission of guest will be based on the tickets with each tickets is priced at a cost of $250.

Running head: INTRODUCTION TO EVENT MANAGEMENT
An estimated number of 700 guest will be arriving at the music event. The exhibitors and the
vendors will be charged a fee of $300 for setting up their shops with an estimated revenue of
$30,000 is anticipated to be generated from such vendor shop. The event will be selling
merchandise products in the form of glassware, badges. Additionally, the event will also be
selling T-shirts, polo shirts and caps with an expected revenue of $28,750 will be generated
from such sale of merchandise. The expected amount of total income is anticipated to be
generated around $2,58,750 and the total amount of expenditure is anticipated to stand
around $129,700.
Budgeted Income:
Income
Admissions Estimated
Estimated Amount $ 1,75,000.00
700 $ 250.00 $ -
$ 1,75,000.00
Exhibitors/Vendors $ 30,000.00
100 $ 300.00
$ 30,000.00
Sponsorships
5 $ 5,000.00 $ 25,000.00
$ 25,000.00
Merchandising Sales
Glassware 50 $ 75.00 $ 3,750.00
Badges 100 50 $ 5,000.00
T-shirts, polo shirts, caps 200 100 $ 20,000.00
$ 28,750.00
Total Income $2,58,750.00

Running head: INTRODUCTION TO EVENT MANAGEMENT
Break-even analysis:
The break-even analysis has been made based on the assumptions that the net amount
of revenue derived after deducting the variable and fixed cost. The cost is restricted to
minimal equipment with sufficient amount of staff to hold the event and the contracted
suppliers will be supplying the additional requirement of the business for the planned events.
Break-Even Analysis
Music
Event
For the Period: Jan 1, 2009 - Jun 30, 2010
Selling Price
(P):
$
250.00
Break-Even
Units (X): 668 units
Break-Even
Sales (S):
£
1,66,925.
41
[42]
Fixed Costs
Advertising
$
1,000.00
Accounting, Legal
$
2,500.00
Equipment
$
20,000.00
Tables and chairs
$
3,500.00
Insurance
$
6,700.00
Entertainment
$
13,000.00
Payroll
$
1,250.00
Rent
$
5,000.00
Supplies
$
2,100.00
Taxes
$
37,424.50
Publicity
$
6,700.00
Miscellaneous
$
2,650.00

Running head: INTRODUCTION TO EVENT MANAGEMENT
Total Fixed Costs (TFC)
$
1,01,824.50
Variable Costs
Variables Costs based on Dollar Amount
per Unit
Cost of Goods Sold
$
35.00 per unit
Direct Labor
$
10.00 per unit
Overhead
$
15.00 per unit
per unit
Sum:
$
60.00
Variables Costs based on Percentage
Commissions 10.00% per unit
Other (specify) 5.00% per unit
Sum: 15.00%
Total Variable Cost per Unit (V)
$
97.50
Contribution Margin per unit
(CM) = P - V
$
152.50
Contribution Margin Ratio
(CMR) = 1 - V / P = CM / P 61.0%
Break-Even Point
Break-Even Units (X)
X = TFC / (P -
V) 668 units
Break-Even Sales (S)
S = X * P =
TFC / CMR
$
1,66,925.41
Targeted Net Income
Targeted Net Income Before Taxes (NIBT)
$
1,00,000.00
Units required to reach targeted NIBT, X =
(TFC + NIBT) / (P-V) 1,324 units
Sales required to reach targeted NIBT, S =
(TFC + NIBT) / CMR
$
3,30,859.84
Rate of return on sales before
taxes = NIBT / S 30.2%
Tax Rate (T) 25%
Net Income After Taxes (NIAT)
= (1-T)*NIBT
$
75,000.00
Rate of return on sales after taxes
= NIAT / S 22.7%

Running head: INTRODUCTION TO EVENT MANAGEMENT
0 50 100 150 200 250
$(1,500)
$(1,000)
$(500)
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
BEP
Profit (Loss)
Total Revenue
Total Cost
Break-Even Point
Total Cost
Total Revenue
Profit (Loss)
Units (X)
Figure 1: Figure representing Break-Even Point
(Source: As Created by Author)

Running head: INTRODUCTION TO EVENT MANAGEMENT
Reference List:
Akintoye, I. R. (2014). Budget and Budgetary Control for Improved Performance. European
Journals of Economics, Finance and Administrative Science, (12), 9-11.
Johansson, T., & Siverbo, S. (2014). The appropriateness of tight budget control in public
sector organizations facing budget turbulence. Management Accounting
Research, 25(4), 271-283.
Jones, M. (2014). Sustainable event management: A practical guide. Routledge.
Klychova, G. S., Faskhutdinova, М. S., & Sadrieva, E. R. (2014). Budget efficiency for cost
control purposes in management accounting system. Mediterranean journal of social
sciences, 5(24), 79.
Otley, D. (2015). in Management Control. Critical Perspectives in Management Control, 27.
Veal, A. J., & Burton, C. (2015). Research methods for arts and event management.