Question

ACC 300 CHAPTER 3 CASE - m Fun Time Cinema is a small theatre looking to book a summer movie blockbuster. The "buzz” on the new movie "Batman Meets Superman iAriboo9200n Jurassic World" has been great and Fun Time wants to show the movie. The following data is available: Price of Ticket Average Concession Sale per Ticket Sold Variable Cost per Concession Sale Fixed Costs per Day $15.00 $11.50 $4.50 $20,000 The producers have offered three options regarding the rental of the film: Option A Option B Option C 65% of Ticket Revenue 35% of Ticket Revenue and $10,000 per day $40,000 per day Fun Time estimates that somewhere between 1,000 and 5,000 will attend per day. Others in the company believe that many more than 5,000 will attend each day. Required Create a spreadsheet to calculate the net income under all three options, assuming that 1,000, 2,500 or 5,000 tickets are sold (nine total income statements). Make sure that the reader can tell your assumptions for selling, price, variable cost per unit and fixed costs. Calculate the break-even under each option. Again, make sure it is easy to tell what your price per unit, variable cost per unit and fixed costs are for each option,

Answer 1

Ticket Sales S. No Particulars Situation 1 Situation 2 Situation 3 Unit of sales per day 1000 2000 5000 Price of Tickets $ 15.00 $ 15.00 $ 15.00 Concession Price of Tickets $ 11.50 $ 11.50 $ 11.50 D=C*A Sales Revenue $ 11,500.00 $ 23,000.00 $57,500.00 Variable Cost $ 4.50 $ 4.50 $ 4.50 F=E*A Total Varaiable cost $ 4,500.00 $ 9,000.00 $ 22,500.00 G=C-E Contribution per unit $ 7.00 $ 7.00 $ 7.00 Fixed Cost per day $ 20,000.00 $ 20,000.00 $ 20,000.00 I=H/A Fixed cost per Ticket $ 20.00 $ 10.00 $ 4.00 J=G-I Operating income per Unit $ (13.00) $ (3.00) $ 3.00 K=J*A Operating profit/(loss) $(13,000.00) $ (6,000.00) $15,000.00 L=H/E Break even sales in units 2857 2857 2857 MED*65% Option A 65% sale revenue $ 7,475.00 $14,950.00 $37,375.00 N=D*35+10000 Option B 35% sales+10000 per day | $ 14,025.00 $ 18,050.00 $30,125.00 0-40000 Option C 40,000/- fixed $ 40,000.00 $40,000.00 $40,000.00 Preferable option Option Option C Option C Q=O-(F+H) Prifit under option C $ 15,500.00 $ 11,000.00 $ (2,500.00) р

Hence

Option C with Situation 1

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