COMMERCE 2AB3 Lecture Notes - Lecture 3: Variable Cost

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 2AB3
• Professor: Mohamed M Shehata

Document Summary

Assume that you are the general manager of a movie theater. The theater has 12,000 tickets practical capacity per month. The following data are extracted from the accounting system: During the month of december 2014 and up until december 30, the movie theater has used only 60% of its capacity during december. Required: what was the theater"s operating income for the month december up until december 30, you are e(cid:454)pe(cid:272)ti(cid:374)g that 250 ti(cid:272)kets (cid:449)ill (cid:271)e sold for the ne(cid:449) year"s e(cid:448)e. the sales (cid:373)a(cid:374)ager (cid:894)joh(cid:374) Murra(cid:455)(cid:895), ho(cid:449)e(cid:448)er, prese(cid:374)ted (cid:455)ou (cid:449)ith t(cid:449)o alter(cid:374)ati(cid:448)es for the ne(cid:449) year"s e(cid:448)e: Alternative 1: buy one ticket at regular price and get the second ticket for only . Under this option, john expects that he would be able to sell a total of 1,000 tickets. Alternative 2: buy one ticket at regular price and get the second ticket free.