Question
2. The MRI business proved to be less glamorous than you had anticipated and you decide, instead, to found a non-profit theater. Your theater will
2. The MRI business proved to be less glamorous than you had anticipated and you
decide, instead, to found a non-profit theater. Your theater will be a low-budget off-
Broadway operation, presenting experimental plays in an old amphitheater in
Prospect Park. You cut a great deal with the Parks Department, which lets you lease
the amphitheater for only $20,000/year. You aim to produce 5 new productions
annually, each using no more than 5 actors, with the theater open 6 nights per week.
You personally will be artistic director and producer, but you will need to hire set
and lighting designers and crews, as well as house staff (ticket sellers and ushers).
You decide to make a programmatic rather than annual budget, for each of your five
productions. You estimate costs for each production as follows:
Set Designer: $7,000
Lighting Designer: $4,000
Actors: $12,000
House Staff: $6,000
Advertising: $2,000
Royalties: $10,000
(Use a spreadsheet)
a. If you sell tickets for $30 each, how many tickets do you need to sell for each
production to break even?
b. You find that you simply cannot fill the seats, and decide to lower ticket prices to
$25, and trim costs by cutting performances to only two nights per week, only
paying actors and house staff for the evenings that they work. This way you figure
you can try to pack the audience in on Friday and Saturday nights, and save money
on labor on the dark nights. The theater seats 100, and you find that in doing it this
way you can sell out the theater. Using this model, how many performances do you
need to give of any production to break even?
I am not sure how to factor in the days for a or b - may you assist and explain please
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