Question

Gryffindor House is a small theater located in Pittsburgh Pennsylvania. The theater contains 1,500 seats. You have recently been hired to manage the theater. Profits at the theater have been all over the place and the board would like you to make some recommendations about pricing of tickets. The board would like to make a profit of $50,000 per run. There are two shows where some decisions should be made. The first show is Goblets of Fire and the second show is Flight of the Hippogriff. Below is some information for Goblets of Fire Ticket price $25 Variable costs $15 Fixed costs 2,000 It is expected that you will have 3 shows and that each show will be about 75% full. For the full run of the show (all 3 shows) For each question below use the information given to answer the question. Show all work 1. What is the Net Operating Income for this show? 2. What is the Breakeven point for this show in units(seats)? Compare this to the expected number of units sold. Explain how this impacts the theater's profits 3. Will Goblets of Fire meet the target profit set by the board? 4. What is the Goblets of Fire's margin of Safety? 5. You wonder if increasing the number of shows and adding a Thursday night show would increase profits. Fixed costs would increase by $500. You expect that you would sell about 60% of seats on a Thursday night. Should you add Thursday night? Explain and be sure to use your calculations to support your argument. Below is some information for Flight of the Hippogriff Ticket price $25 Variable costs $10 Fixed costs 4,000

Answer 1

Window Hel File Edit View Tools Excel Insert Format Data Home Page Layout Formulas Review View Insert Draw Data Calibri (Body) A 12 A В I U Paste fx Н1 A В C 1 Details provided in Ques 2 Info About 3 ticket price 4 VC 5 FC 6 shows Globet of fire 25 15 2000 7 75% full 8 no of seats 1500 1500 75% 1125 3 9 No seat occupency per show 10 Total occupied 1125 3375 11 3 shows Per unit 12 1 show 3375 25 13 Gross Income 28125 84375 14 Less: -16875 15 Variable cost 16 Contribution 1125 15 3 -50625 15 33750 11250 10 17 18 Fixed cost -2000 -2000 19 20 Operating Income 9250 Ques 1 31750 25

File Edit View Windo Excel Insert Format Tools Data Home Page Layout Formulas Review Insert Draw Data Calibri (Body) A 12 A I U Paste fx 154 A C E 22 23 Break even point in units Fixed cost /contribution per unit 24 200 Seats 2000/10 25 Ques 2 26 27 28 Break even point in units 200 seats 29 Expected no units sold (75%) 30 this should increase profit 1125 Seats Ques 2 Ques 2 31 32 33 sales for desired profit of 50000 50000+2000/10 5200 seats Ques 3 34 35 36 Margin of safety profit/contribution per unit 37 9250/10 38 925 seats Ques 4 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 Sheet1 Sheet2 Ready Below is some information for Flight of the Hinpogriff