A theatre with seating for 1200 persons is maintained and operated by a local authority. The theatre is used for plays by the authority's own repertory company and is let for concerts, other productions and meetings.

In an average week details of the expenditure and income of the theatre are as follows:

When the repertory company stages a play, half of all available tickets at each price are usually sold for five evemng performances.
There are 300 seats at £2.00 each, 400 seats at £1.50 each and 500 seats at £1.00 each.
The local operatic society has offered to hire the theatre for one week in October 1981 for its production of 'The Desert Song' at a rental of either:
(i) one half of the income from all tickets sold; or (ii} £3000.
The society would, irrespective of the hire basis chosen, provide its own programme sellers and attendants in place of those usually employed by the authority. Guaranteed local support would enable the operatic society to reduce the prices given above by £0.25 for each seat, and expect to have 75% capacity audiences for each of the seven performances planned for six evenings and one Saturday afternoon.
If the letting were approved, the authority would remain responsible for providing and paying full-time employees and artistes and for maintenance. lighting and heating. It would not be obliged to pay its part-time employees, nor would it incur expenditure for that week on scenery and equipment and on costumes.
You are required to prepare a report for the forth-coming meeting of the authority's Recreation and Arts Committee setting out:

(a) in a columnar statement the expected income and expenditure and the resultant surplus or deficit for one week if the theatre is:
(i) used by the repertory company for a play;
(ii) let to the operatic society for 'The Desert Song', on each of the two bases stated above;

(b) your recommendation;

(c) three aspects or uncertainties which you would like the committee to consider.

Transcribed Image Text:

Expenditure: Artists Salaries and wages of full-time employees Wage-related costs Part-time programme sellers and attendants Maintenance, lighting and heating () 1600 600 500 100 550 Proportion of Recreation Department's administration costs (apportioned) 800 Scenery and equipment 400 Costumes 200 Income, other than ticket sales: Refreshments, net Lettings Sponsorship donations Advertising 300 160 100 100