Gryffindor House is a small theater located in Pittsburgh Pennsylvania. The theater contains 1,500 seats. You have recently been hired to manage the theater.  Profits at the theater have been all over the place and the board would like you to make some recommendations about pricing of tickets. The board would like to make a profit of $40,000 per run.  A run is all of the performances for a particular show.  

There are two shows where some decisions should be made. The first show is Goblets of Fire and the second show is Flight of the Hippogriff.

Below is some information for Goblets of Fire

Ticket price $25

Variable costs $15

Fixed costs 2,000 (this is for all the performances in the run)

It is expected that you will have 3 performances and that each performance will be about 75% full, for the full run of the show (all 3 performances).  For each question below use the information given to answer the question.  

1.    What is the Net Operating Income for the run of the show?

2.    What is the Breakeven point for this run in units (seats)? Compare this to the expected number of units sold. Explain how this impacts the theater's profits. 

3.    Will Goblets of Fire meet the target profit set by the board?  Calculate how many seats would need to be sold to meet the target profit.

4.    What is the Goblets of Fire's margin of Safety? 

5.    You wonder if increasing the number of performances and adding a Thursday night performance would increase profits.  Fixed costs would increase by $500.  You expect that you would sell about 60% of seats on a Thursday night. Should you add Thursday night? Explain and be sure to use your calculations to support your argument.

What recommendations can you make to increase the profitability of Goblets of Fire? Give at least 2 specific recommendations and use analysis to support your recommendati