Saturday Oct 23 2010
We are studying Cost Volume Profit topics in Managerial Accounting. The higher the fixed cost the higher the break even point. Here is a case in point.
Robert Schuller's elaborate Cathedral became the signature look for what has emerged as the 'mega church.' But as the article says, the Christmas pageant was more elaborate than a KISS concert. Clearly the group ignored budgets, controls, and warning signs that something was wrong. The recession of 2009 saw contributions plummet, this should have been clear in coming, and of course they were in no shape to cut massive fixed expenses. Please read the article to learn just how high fixed expenses became.
The Summit Sports Arena in Houston is today's Lakewood Church. What will happen to the $36M Cathedral, I don't know but I expect that there is just too much fixed cost here. This should have been paid for when it was built, not after, on, shall we say, a hope and a prayer.
Professor Elam 
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