Ticketmaster contracts with the producer of Blue Man Group to sell tickets online. Ticketmaster charges each customer a fee of $9 per ticket and receives $22 per ticket from the producer. Ticketmaster does not take control of the ticket inventory. Average ticket price for the event is $105.
How much revenue should Ticketmaster recognize for each Blue Man Group ticket sold?
A) $9 because the $22 from the producer is similar to a negative cost of goods sold
B) $105 because the $83 is cost of goods sold paid to the Blue Man Group producer
C) $31 because both the fee from the customer and the Blue Man Group producer are earned
D) $114 because the $83 is cost of goods sold paid to the Blue Man Group producer
E) None of the above

Question

Quizplus · Accepted Answer

Ticketmaster should recognize $31 in revenue for each ticket sold because it earns a $9 fee from the customer and receives $22 from the producer, totaling $31. The company does not take control of the ticket inventory, so it acts as an agent rather than a principal in the transaction, meaning it recognizes revenue for the services it provides (the $9 fee) plus any additional amounts received from the producer ($22), not the full ticket price.

Ticketmaster Contracts with the Producer of Blue Man Group to Sell