Refer to the data for Fairfield Blues in rows 1-12 of Exhibit 12-5, Assume that it is considering these alternative scenarios:

1. Increase the number of concerts to 10 per year. Average attendance at concerts will decline 10 percent per performance from the level planned, but all other data are the same as in rows 1—12 of Exhibit 12—S.

2. Decrease the number of concerts to four per year. Average concert attendance will increase 25 percent, but all other data are the same as in rows 1—12 of Exhibit 12-5.

3. Increase the box seating by 25 percent, maintain average attendance in each category of seating, and increase the number of concerts to 10 per year. All other data are the same as in rows 1—12 of Exhibit 12-5.

Required

a. Project the operating income for each of the three scenarios.

b. Prepare a memo to management to recommend the best scenario to choose from the three listed and the base-case scenario.