2-31. Movie Manager Julia Sanchez is the manager of Stanford's traditional Sunday Flicks. Each Sunday a film has two showings. The admission price is deliberately set at a very low $2. A maximum of 500 tickets is sold for each showing. The rental of the auditorium is $220 and labor is $290, including $60 for Sanchez. Sanchez must pay the film distributor a guarantee, ranging from $200 to $600 or 50% of gross admission receipts, whichever is higher. Before and during the show, refreshments are sold; these sales average 12% of gross admission receipts and yield a contribution margin of 40%. 1. On June 3, Sanchez played Forrest Gump. The film grossed $1,500. The guarantee to the distributor was $500, or 50% of gross admission receipts, whichever is higher. What operating income was produced for the Students' Association, which sponsored the showings? 2. Re-compute the results if the film grossed $900. 3. The "four-wall" concept is increasingly being adopted by movie producers. In this plan the movie's producer pays a fixed rental to the theatre owner for, say, a week's showing of a movie. As a theatre owner, how would you evaluate a "four-wall" offer?