Question: Please answer in the same format as the picture. Discussion Initial Response Due by Wednesday: You own Paradox Escape Room Ltd and have 3 locations

 Please answer in the same format as the picture. Discussion Initial
Please answer in the same format as the picture.
Discussion Initial Response Due by Wednesday: You own Paradox Escape Room Ltd and have 3 locations in the local area. One of the locations is exclusively horror-themed escape rooms and the location barely breaks even. The revenue and costs for the horror-themed escape room are below. You are evaluating whether to close the horror-themed location or change it to a "Million Dollar Listing Virtual Reality" escape room.
The "Million Dollar Listing" option forecasts the following changes to operation revenues and expenses:
revenues will increase by 20%
variable staffing and merchandise costs will increase by 3%(increased labor costs because we need tech-savvy staff to fix glitches)
variable selling expenses remain unchanged
fixed costs increase by $60,000(this is the cost of the virtual reality equipment)
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.
\table[[Continue/Discontinue,Continue,Discontinue,Differential Effects],[Revenue,$500,000,,],[Costs,,,],[Variable staffing and merchandise expenses,($325,000),,],[Variable selling expenses,($100,000),,],[Fixed costs,($74,100),,],[Profit (loss),$900.00,,]]
\table[[Continue/Million Dollar Listing,Continue,"Million Dollar",Differential Effects],[Revenue,$500,000,,],[Costs,,,],[Variable staffing and merchandise expenses,($325,000),,],[Variable selling expenses,($100,000),,],[Fixed costs,($74,100),,],[Profit (loss),$900.00,,]]
Response Due by Wednesday: You own Paradox Escape Room Ltd and have

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!