Problem 7-45 Break-Even Analysis; Profit-Volume Graph; Movie Theaters (LO 7-1, 7-3, 7-4)

Silver Screen, Inc. owns and operates a nationwide chain of movie theaters. The 500 properties in the Silver Screen chain vary from low-volume, small-town, single-screen theaters to high-volume, urban, multiscreen theaters. The firms management is considering installing popcorn machines, which would allow the theaters to sell freshly popped corn rather than prepopped corn. This new feature would be advertised to increase patronage at the companys theaters. The fresh popcorn will be sold for $1.75 per tub. The annual rental costs and the operating costs vary with the size of the popcorn machines. The machine capacities and costs are shown below. (Ignore income taxes.)

	Popper Model
	Economy			Regular			Super
Annual capacity		45,000	tubs		90,000	tubs		140,000	tubs
Costs:
Annual machine rental	$	8,000		$	11,000		$	20,000
Popcorn cost per tub		0.13			0.13			0.13
Other costs per tub		1.22			1.14			1.05
Cost of each tub		0.08			0.08			0.08

Problem 7-45 Part 2

Question: Prepare a profit-volume graph for one theater, assuming that the Super Popper is purchased.