Annie Smith Dance Center: The Break-Even Analysis

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Table of Contents

Analysis of the Segments
Analysis of the Business as in General
Recommendation
Reference

Annie Smith Dance center is a professional group that offers three styles of dance concerts each year. The three dance concerts include Hip-Hop dance, Jazz and Tap dance, and Christmas spectacle. Following the requisition by the center to have a financial analysis and presentation in an easy-to-read and interpret format, JJ Analytics hereby fulfills this demand by presenting a comprehensive financial analysis on the performance and projections of the Annie Smith Dance Center.

Analysis of the Segments

As established, Annie Smith Dance Center presents three different dance concerts each year. To effectively conduct a financial analysis on the business, the three segments must be treated separately for proper adjustments and accurate information. For purposes of determining profitability and associated business activities, a break-even analysis was conducted. The break-even point represents a point at which the revenue generated from the business meets operating costs (Garrison et al, 2011). A business starts generating profits beyond its beak even point. For the three business segments, break-even points were calculated based on the number of performances needed to break even. Break-even points for the various segments were as follows:

Hip-Hop dance at 3 performances
Jazz and Tap at 8 performances
Christmas Spectacle at 1 performance

From the computations, it can be deduced that the Christmas concert is the most profitable of the three events organized by Annie Smith Dance center

Analysis of the Business as in General

Although individual analysis suggests that all the segments break even early on, the situation is quite different on a general basis. The break-even analysis of the business as a whole; based on revenue, indicates that revenue of $ 1,253,448 must be attained under the current conditions. To attain a target profit of at least $200,000, the company should increase its performance rates or ticket prices by 20 percent of the current prices.

Recommendation

The break-even analysis helps businesses make informed decisions that affect profitability as a result of changes in prices, costs, and volume. Annie smith Center has great potential as indicated in its break-even analysis. However, to break even within one year of operation, the company should consider raising the ticket prices by 20 percent of the current rates or alternatively increase the performance rates of each dance segment by 20 percent.

Reference

Garrison, R. H., Noreen, E. W., Brewer, P. C., & Mardini, R. U. (2011). Managerial Accounting.14th Ed,New York: McGraw-Hill/Irwin.

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Annie Smith Dance Center: The Break-Even Analysis

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