American Cinema Theatre Facing stiff competition from the movie megaplexes, American Cinema Theatre (ACT) is considering becoming a discount theatre. This means ACT would show second-run movies: these are films that have previously been shown at first-run theatres. ACT would have to charge a lower ticket price for second-run movies but the owners believe that the lower ticket price will increase their customer base-allowing teenagers, senior citizens, and large families to attend their theatre. Also, acquiring second-run movies is considerably less expensive then acquiring first-run movies which will decrease ACTs variable costs. The financial information for both theatres is presented below: Regular Discount 80,000100,000 $800,000 $700,000 Variable Costs $600,000 $420,000 Fixed Costs $100,000 $140,000 Tickets Sales Directions: 1. Prepare a contribution margin income statement for both scenarios. The statement should include both total dollars and per unit costs. 2. Compute the company's contribution margin ratio under both scenarios. 3. Compute the break-even point in sales dollars under each scenario. How many tickets will need to be sold under each scenario to break-even? 4. If the company wishes each scenario, regular theatre and discount theatre, to generate a target profit of $250,000, what is the amount of sales dollars that needs to be generated? How many tickets will then need to be sold? 5. Use the information in question #4 to prepare a contribution margin income statement for both the regular and discount theatres. 6. Use the above calculations to explain the best option for the company (regular theatre versus discount theatre). The explanation should include both numbers and words. The explanation should also be at least four sentences