Question

Required information 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.) Economy 45,000 tubs Popper Model Regular 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 $ 8,000 0.13 1.22 0.08 $ 11,000 0.13 1.14 0.08 $ 20,000 0.13 1.05 0.08 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 two endpoints. Use the point tool (Break Even Point) to plot the Break Even Point. For your graph to grade correctly, you must enter the exact x and y coordinates for each endpoint. Use 3-point shader, to show the profit and loss area. Once all points have been plotted, click on the line (not individual points) and a tool icon will pop up. You can use this to enter exact co-ordinates for your points as needed. To remove a line/point from the graph, click on the line/point and select delete option. Use 3-point shader, to show the profit and loss area.)

Answer 1

Above question is about preparation of profit volume graph. Refer the below image for more detailed solution.

Deovuirement: theathre, assuming prepare a that the profit super volume popper il graph for one porchased: calculation of Break-even Break even volume - Sales Volome for super model: Rixed cost conterbotion per unit = 20000 $ 20.000 7-9-26 0.49 = 40,816 tubs (rounded) protit - vdome graph. Dollars por year (in thousands) $200 tfud - $10 Break even point 40,816 tobs 40 Jo Tubs sold per year (in thousands) Loss area - - Fixed rental cost : $20000 per year ($20) - represents - represents Loss area Profit area