Program Break-Even Analysis: Managerial Finance

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2. Program Break-Even In determining the break-even analysis, the break-even formula of the total revenue (TR) equals the total expense (TE). In the budget, the fixed revenues (FR) and variable revenues, do not relate to the green fees or the pool prices. Lastly, the formula designates that revenue as unrelated variable revenue (UVR). (FC - FR) + (VC * Q - UVR)
VR = -------------------------------------- Q In the spreadsheet (see Appendix B for break-even green’s fee) factors the break-even green’s fees with and without allocated management costs. In calculating the amounts, the revenues and costs refer to the Golf column of the program budget. The Park’s break-even green’s fees
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The break-even pool considers the admission’s fees with and without allocated management costs. Once calculated, the Park will break even by charging between $5.54 with allocated management costs and $6.09 with management costs included.
3. Program Shut Down Since the park manager desires to shut down some of the programs of Stratton Township Park, the calculations determined, in the program shut down a section of the spreadsheet (see Appendix D for detailed information), that all revenues associated with the program operations would be lost. All of the programs, with the exception of the Concerts, generate positive marginal contributions to the overhead of the Park’s net. However, the direct operating expenses could be avoided to combat the shutdown of programs, such as facilities management salaries, direct operating salaries, or direct utility and energy costs for the golf course and the pool. Furthermore, the salaries of the two maintenance workers could be cut or the workers could be laid off to save revenue for the Park. Although, the layoffs could decrease the quality of the Park, which could result in fewer
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In addition, the municipal government benefits from recreational facilities because it requires fewer public amenities and municipal services than new land development, which offers a cost-effective alternative (Active Living Research, 2010). The existence of the Park provides compact walkable subdivisions preserving open space and concentrating development on smaller lots, which provides financial benefits for municipalities related to lower infrastructure costs (Active Living Research,

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