Sophie Bradford is the manager of Anthem's traditional Sunday Flicks, sponsored by the Anthem Student Association. The admission price is deliberately set at a very low $ 3.5. Each Sunday, a film has two showings and a maximum of 1,600 tickets can be sold for each showing. The rental of the auditorium is $ 280 and labor is $455,including $120 for Bradford.Bradford must pay the film distributor a guarantee, ranging from $ 270 to $ 800, or 40% of gross admission receipts, whichever is higher. Before and during the show, she sells refreshments; these sales average 10% of gross admission receipts and yield a contribution margin of 50 %.

Requirement 1: On June 3, Bradford screened The Descendants. The film grossed $10,500. The guarantee to the distributor was $700 or 40% of gross admission receipts, whichever is larger. What operating income was produced for the student association.

Requirement 2: Recompute the results if the film grossed $1,400

Requirement 3: The "four-wall" concept is increasingly being adopted by movie producers. In this plan, the movie's producer pays a guaranteed fixed rental to the theater owner for, say, a week's showing of a movie and the producer receives the ticket receipts less the fixed rental. As a theater owner, how would you evaluate a "four-wall" offer?