The Lavalle Ladies Legends (LLL), a professional hockey team playing in the Canadian Hockey League, is preparing an outline forecast of its pro forma income statement for 2010. The president of the team thinks it is most likely that she can increase ticket sales by 20% in 2010. League officials believe that revenues can grow by as much as 40%. However, if some of the top players in the league defect to a European league, sales may drop to only 80% of the 2009 levels.

Required:
(a) The president has asked you to prepare a scenario analysis of the 2010 income statement similar to the outline shown above.
(b) Advise the president in her negotiations with a food concessions supplier who is willing to offer a 5% discount if LLL guarantees to buy at least $100,000 worth of food during the 2010 hockey season. In 2009 LLL bought $90,000 worth of food.

Transcribed Image Text:

2010 Most Likely 2010 Optimistic View 2010 Pessimistic View Sales ariable costs Fixed costs Net income 2009 1,200,000 500,000 600,000 100,000