Question

Problem 7.45 Break-Even Analysis: Profit-Volume Graph; Movie Theaters (LO 7-1,7-3, 7-4) Silver Screen Inc. owns and operates a nationwide chain of movie theaters. The 500 properties in the Silver Screen chain vary from low volume, small-town,single-screen theaters to high-volume, urban, multiscreen theaters. The firm's management is considering installing popcorn machines, which would allow the theaters to sell freshly popped corn rather than prepopped corn. This new feature would be advertised to increase patronage at the company's theaters. The fresh popcorn will be sold for $1.75 per tub. The annual rental costs and the operating costs vary with the size of the popcorn machines. The machine capacities and costs are shown below. (Ignore income taxes.) Popper Model Economy 45,000 tubs 90,000 tubs Super 140,000 tubs $ Annual capacity Costs: Annual machine rental Popcorn cost per tub other costs per tub Cost of each tub $ 11,000 0.13 8.000 0.13 1.22 8. $20,000 0.13 1.05 0.88 Problem 7-45 Part 2 2. Prepare a profit-volume graph for one theater assuming that the Super Popper is purchased. (Before plotting any points, be sure to round your calculations to the nearest thousand. Use the line tool to draw a single line (Profit). This line should only contain the

Answer 1

Solution:

Selling price is $1.75 per tub.

Take the data given under super popper in the table provided for calculation.

Sales Volume	Sales	Popcorn cost per tub	Other cost per tub	Cost of each tub	Total variable cost per tub	Total variable cost	Annual machine rental	Profit
10000	17500	0.13	1.05	0.08	1.26	12600	20000	-15100
20000	35000	0.13	1.05	0.08	1.26	25200	20000	-10200
30000	52500	0.13	1.05	0.08	1.26	37800	20000	-5300
40000	70000	0.13	1.05	0.08	1.26	50400	20000	-400
50000	87500	0.13	1.05	0.08	1.26	63000	20000	4500
60000	105000	0.13	1.05	0.08	1.26	75600	20000	9400

Sales = Sales volume * selling price

Total variable cost per tub = Popcorn cost per tub + Other cost per tub + Cost of each tub

Total variable cost = Sales volume * Total variable cost per tub

Profit = Sales – Total variable cost – Annual machine rental

The below table is created for the purpose of drawing chart.

Tubs sold per year (in thousands)	Dollars per year (in thousands)
10	-15
20	-10
30	-5
40	0
50	4
60	9

Book1 - Excel (Product Activation Failed) File Data Review View Tell me what you want to do... Share Home Insert Page Layout Formulas % Cut Calibri - 11 - A E Copy *Format Painter BI U A === On General 72 Wrap Text Merge & Center - Sign in AutoSum Fill Sort & Find & Clear Filter Select Editing Paste S % , 809 Conditional Format as Formatting Table Styles Cell Styles Insert Delete Format - Cells Clipboard Font Alignment Number X20 L N O P e r s t u v w x y z a Tubs sold per year (in thousands) Dollars per year (in thousands) -15 DOLLARS PER YEAR (IN THOUSANDS) 10 20 50 30 60 70 TUBS SOLD PER YEAR (IN THOUSANDS) ... Sheet Sheet15 Sheet16 Activate Windows Go to Settings to activate Windows 9 -- + 100% - (1) ENG 17-02-2020 Ready 1 Type here to search o e @ wl