Paradox Escape Room Ltd has 10 locations in the local area. One of the locations is exclusively horror-themed escape rooms and the location consistently breaks even. The revenue and costs details for the escape room are listed below. The company is evaluating whether to close the horror-themed location or change it to a "Million Dollar Listing Virtual Reality" escape room. If it is changed to a "Million Dollar Listing" theme, the forecasted monthly revenue is $150,000, variable staffing and merchandise costs will increase $5,000, and fixed costs will increase by $10,000. All other costs remain the same.

Part 1: Prepare two differential analyses. Remember that each analysis will compare the current situation to the change. Show your work.

• Analysis #1 will determine if the horror-themed locations should be continued or discontinued.
• Analysis #2 will determine if the horror-themed location should be changed to a "Million Dollar Listing Virtual Reality" theme.

Part 2: As the financial analyst, you believe there is a fourth option to make the escape room more profitable. Describe your plan to increase profitability.

Discussion Response Due by Saturday: Review another student's fourth option (Part 2) and evaluate their profitability plan.

Continue/Discontinue	Continue	Discontinue	Differential Analysis
Revenue	$ 102,000
Costs
Variable staffing and merchandise expenses	($ 45,500)
Variable selling expenses	($ 21,500)
Fixed costs	($ 35,000)
Profit (loss)	$ -
Continue/Million Dollar Listing	Continue	"Million Dollar"	Differential Analysis
Revenue	$ 102,000
Costs
Variable staffing and merchandise expenses	($ 45,500)
Variable selling expenses	($ 21,500)
Fixed costs	($ 35,000)
Profit (loss)	$ -

Answer rating: 100% (QA)

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