Estimate commission revenues for Stubs-R-Us for the coming year.
Stubs-R-Us is a local event ticket broker. Last year, the company sold 800,000 tickets with an average commission of $7. Because of the general economic climate, Stubs expects ticket volume to decline by 25 percent. In addition, employees at a local insurance company headquarters accounted for 9 percent of Stubs’ volume. The headquarters relocated to another state and all the employees closed their accounts.
Offsetting these factors is the observation that the average commission per sale is likely to increase by 10 percent because the average ticket prices are expected to be larger in the coming year.
Required:
Estimate commission revenues for Stubs-R-Us for the coming year.
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