How does outfitting AMC movie theaters with recliners affect the company's breakeven point and operating leverage?

AMC Entertainment Holdings Inc. is spending millions of dollars to install recliner-seating in its theaters.

AMC Entertainment Holdings Inc. is outfitting about 1,800 of its nearly 3,000 auditoriums with recliners for a total cost of about $600 million. The recliners will remove up to two-thirds of the seating capacity in each theater, due to the fact that the recliners fully recline (think La-Z-Boy). The cost per auditorium is about $350,000 to $500,000 with some of the costs being paid by the landlords.

At AMC theaters where the new seating has been installed, movie ticket sales have increased by up to 80%.

AMC plans to keep ticket prices at the current price for the first year that the new seating is installed.After the first year, then ticket prices will be increased by $1 to $2 per ticket.

Questions

1. How would the costs of the recliners and installation within a given theater affect that theater's break even point? Explain.
2. Would the 80% increase in ticket sales in a recliner-outfitted theater affect the theater's break even point?Explain why or why not.
3. How would the $1 to $2 increase in the price of a movie theater ticket after a year impact break even?Explain.
4. How does the installation of these recliners impact the company's operating leverage?Does the company have more or less risk with the new cost structure?Explain.