You have accepted a new job at Scogin Cinemas and have been tasked with the responsibility of establishing a master budget for the company involved in the entertainment industry. You are amazed they have never budgeted their income statement before. Scogin is somewhat unique in that in addition to showing movies, having a virtual reality golf center and renting theatres for business meetings, they also produce and sell a unique popcorn ball that people drive miles for just to purchase. The popcorn ball is available in three flavors: plain,
cheddar, and caramel. The corporate tax rate is 30%. Sales tax is 7% on all food and beverage items. Scogin theatres has four different locations:
• Center City. A new location that just opened in the heart of the downtown area two years ago that attracts a number of younger people in the heavy technology and medical industries present in the city.
Average age demographic: 25-35 years old. Average income: $85,000
• Middleville. This location has been around a while and remains popular with people in the rural communities that surround it and has a wide demographic. Average age demographic: 20 – 65 years old. Average income: $90,000
• Blingtown. This location is situated in an affluent area on the South part of the city. This location is the only that serves alcohol and wine. Average age demographic: 35 – 65 years old. Average income: $110,000
• Beachtown Drive-In. The Beachtown is a drive-in movie theatre open May 1 – September 30. It is popular with locals as well as visitors from out of state who are spending their summer near/on the beaches. Average age demograhic: 18 – 58 years old. Average income: $75,000 The average attendance numbers for these four locations is as follows:

Month

Center
City

                           Middleville                 Blingtown                Beachtown
January                  42,546                      45,890                          23,554                 0
February                  55,222                   58,281                          32,333                  0
March                    55,890                      59,100                          33,000                  0
April                        58,213                     62,000                          35,000                  0
May                        62,000                      64,000                          34,234                2,500
June                       68,906                       73,235                          42,657                4,900
July                         72,887                       76,901                          45,123                10,223
August                    63,123                      63,588                          48,550                 8,753
September            58,212                      60,333                          57,891                   2,241
October                  43,222                      47,294                         42,120                        0
November             65,343                       71,488                        68,145                         0
December              71,145                       75,981                         70,112                        0

Requirements:
1). As we learned in Chapter 8, one of the financial budgets we can establish is a pro forma income statement. You are to produce a pro forma income statement (in dollars) for each location and a summarized income statement in the following format :

Jan Feb Mar Q1 Apr May Jun Q2 Jul Aug Sep Q3 Oct Nov Dec Q4 Total

Revenues
Expenses
Other income/expense
Income Tax
Net Income
There will be five pro forma income statements. The consolidated pro forma income statement will be the sum of the Center City I/S + Middleville I/S + Blingtown I/S + Beachtown I/S. The income statements will be in Excel and linked to each other for “what if?” analysis.
For example, your first tab would be consolidated, tab two: Center City, tab three: Middleville, tab four: Blingtown, tab five: Beachtown. The final tab will be labeled assumptions and you will document the answers to the questions below there. In the assumptions tab, you will also document your assumptions for each of the pro forma line items you developed from (a), (b), and (c). You may also develop other tabs as you see fit if it helps you present the information more clearly to the management team you’ll be presenting to. You could create a tab to answer each requirement number below if you wish.

a). You will need to determine 6 revenue streams each location would likely have as a result of selling movie tickets, event space, and food items.
b). With respect to expenses, identify 20 expenses that will be budgeted and likely incurred as a result of a business with this type of operation.
c). Other income / expense will have 3 areas that will be budgeted and you believe are likely to be incurred as a result of a business with this type of operation.

2). What are the considerations you would need to make with respect to projecting revenue?

3). What are the considerations you would need to make with respect to projecting expenses?

4). With considerations need to be made in the manufacture and distribution of balls? How is the best way to cost this product and determine its selling price? Should prices be different by market?
5). Should all locations sell the popcorn balls? If so, how do they get transferred to one location to the other and how will the inventory be appropriately tracked?