Week 12: Discussion A Purpose: Evaluate whether to continue or discontinue a segment; explain the business ramifications of your decision KSAS: Understand and apply differential analysis Points: 10 Admin: This is a multi-part question. There are no minimum word counts but you must answer the question in full. 17 Discussion Initial Response Due by Wednesday: 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 Discussion Response Due by Saturday: Review another student's fourth option (Part 2) and evaluate their profitability plan. Continue/Discontinue Continue $ 102,000 Discontinue Differential Analysis Revenue Costs Variable staffing and merchandise ($ 45,500) expenses Variable selling expenses ($ 21,500) Fixed costs ($ 35,000) Profit (loss) $ Differential Continue/Million Dollar Listing Continue "Million Dollar" Analysis $ 102,000 Revenue Costs Variable staffing and merchandise ($ 45,500) expenses Variable selling expenses ($ 21,500) Fixed costs ($ 35,000) Profit (loss) $