intermediate managerial case study

CASE STUDY Leo's Four-Plex Theater Leo's Four-Plex Theater was a single-location, four number of the first ticket sold from the ending screen theater located in a small town in west Texas. number. Leo Antonelli bought the theater a year ago and hired 2. The amounts of cash collected were counted daily Bill Reilly, his nephew, to manage it. Leo was concerned, and compared with the total value of tickets sold. The however, because the theater was not as profitable as he cash counts revealed, almost invariably, less cash had thought it would be. He suspected the theater had than the amounts that should have been collected. some control problems and asked Park Cockerill, an The discrepancies were usually small, less than $10 accounting professor at a college in the adjacent town, per cashier. However, on one day two weeks before to study the situation and provide suggestions Park's study, one cashier was short by almost $100. Park found the following: 3. Just inside the theater's front doors was a lobby with a 1. Customers purchased their tickets at one of two refreshment stand. Park observed the refreshment ticket booths located at the front of the theater. The stand's operations for a while. He noted that most of the theater used general admission (not assigned) seat stand's attendants were young, probably of high school ing. The tickets were color coded to indicate which or college age. They seemed to know many of the cus- movie the customer wanted to see. The tickets were tomers, a majority of whom were of similar ages, which also dated and stamped "good on day of sale only." was not surprising given the theater's small-town loca- The tickets at each price (adult, child, matinee, tion. But the familiarity concerned Park because he had evening) were prenumbered serially, so that the also observed several occasions where the stand's number of tickets sold each day at each price for attendants either failed to collect cash from the custom- each movie could be determined by subtracting the ers or failed to ring up the sale on the cash register. 22 chant 04 10554.indd 22 06041 Private Fitness, Inc. 4. Customers entered the screening rooms by passing passes with Bill Reilly's signature on them. These through a turnstile manned by an attendant who problems did not account for all of the customer test separated the ticket and placed part of it in a locked count discrepancies, however. Park suspected that the 'stub box. Test counts of customers entering and ticket collectors might also be admitting friends who leaving the theater did not reconcile either with the had not purchased tickets, although his observations number of ticket sales or the stub counts. provided no direct evidence of this. Park found evidence of two specific problems. First, When his study was complete, Park sat down and he found a few tickets of the wrong color or with the wondered whether he could give Leo suggestions that wrong dates in the ticket stub boxes. And second, he would address all the actual and potential problems, found a sometimes significant number of free theater yet not be too costly