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, and single-screen theaters to high- volume, urban multi screen theaters. The firm’s management is considering installing popcorn machines, which would allow the theaters to sell freshly popped corn rather than pre popped corn. This new feature would be advertised to increase patronage at the company’s 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.)

Required:
1. Calculate each theater’s break-even sales volume (measured in tubs of popcorn) for each model of popcorn popper.
2. Prepare a profit-volume graph for one theater, assuming that the Super Popper is purchased.
3. Calculate the volume (in tubs) at which the Economy Popper and the Regular Popper earn the same profit or loss in each movietheater.

Transcribed Image Text:

Economy 45,000 tubs Popper Model Regular 90,000 tubs Super 140,000 tubs Annual Costs: capacity . Annual machine renta Popcom cost per tub.... Other costs per tb $8,000$11,000 $20,000 .13 1.22 .08 13 .13 1.05 .08 Cost of each tub .08