Consider the three options (Student Rush, Sunday Matinee and New Series) discussed on pages 230-31 of the Nagle, Hogan & Zale reading. Then work through the following three scenarios regarding the theatre problem. Thus, you should have three different scenarios (below), each with three different options (from page 231 EXHIBIT 1: Analysis of Three Proposals for the Symphony Orchestra).

For each of the nine situations:

What is the break-even volume?

What is the total profit if all tickets are sold?

EXHIBIT 1: Student Rush Sunday Matinee New series

Price $ 4 $6 $10

Unit Sales $200 $700 $800

Revenue $800 $4200 $8000

Other sales forgone (0) ($1500) ($1000)

Revenue Gain $800 $2700 $7000

Incremental Rehearsal Cost 0 0 $4500

Incremental Performance Cost 0 $2000 $2000

Variable Costs $200 $550 $700

Incremental Costs $200 $2550 $7200

Net Profit Contribution $600 $150 ($200)

Scenario 1 Scenario 2 Scenario 3

Fixed Overhead $1,500 $1,500 $1,500

Rehearsal Costs $4,500 $4,500 $2,500

Performance Costs $2,000 $1,200 $2,000

Variable Costs (tickets) $1 per patron $.50 per patron $3 per patron