A local movie theater owner explains to you that ticket sales on weekends and ev

Question

A local movie theater owner explains to you that ticket sales on weekends and evenings are strong, but attendance during the weekdays, Monday through Thursday, is poor. The owner proposes to offer a contract to the local grade school to show educational materials at the theater for a set charge per student during school hours. The owner asks our help to prepare a CVP analysis listing the cost and sales projections for the proposal. The owner must propose to the school's administration a charge per child. At a minimum, the charge per child needs to be sufficient for the theater to break even.

Your team is to prepare two separate lists of questions that enable you to complete a reliable CVP analysis for this situation. (no numbers required when preparing your questions)

Respond in your thread with the following two headers:

(a) Questions for school administrators

(b) Questions for owners

Your questions should be specific items. For example: What are the fixed cost? What are the variable cost? What is breakeven? You are the one doing the analysis and gathering information to make the determination on fixed cost, variable cost and breakeven. Thus, in order to compute fixed cost, variable cost and breakeven you need to find out more information from both the owner and school administrators.

Explanation / Answer

Objective: To offer a contract to the local grade school to show educational materials at the theater for a set charge per student during school hours. To prepare Cost Volume Profit (CVP) analysis mentioning the cost & sales projections for the proposal.

Charge per child to be proposed (minimum charge to break even)

Questions for school administrators

Questions for theater owner

Inference:

Based on the answers to the above 4 questions, we shall calculate break-even point and SVP analysis...

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