Reference no: EM132502163

The MRI business proved to be less glamorous than you had anticipated and you decide, instead, to found a non-profit theater. Your theater will be a low-budget off- Broadway operation, presenting experimental plays in an old amphitheater in Prospect Park. You cut a great deal with the Parks Department, which lets you lease the amphitheater for only $20,000/year. You aim to produce 5 new productions annually, each using no more than 5 actors, with the theater open 6 nights per week.

You personally will be artistic director and producer, but you will need to hire set and lighting designers and crews, as well as house staff (ticket sellers and ushers). You decide to make a programmatic rather than annual budget, for each of your five productions. You estimate costs for each production as follows:

Set Designer: $7,000

Lighting Designer: $4,000

Actors: $12,000

House Staff: $6,000

Advertising: $2,000

Royalties: $10,000

(Use a spreadsheet)

Question a. If you sell tickets for $30 each, how many tickets do you need to sell for each production to break even?

Question b. You find that you simply cannot fill the seats, and decide to lower ticket prices to $25, and trim costs by cutting performances to only two nights per week, only paying actors and house staff for the evenings that they work. This way you figure you can try to pack the audience in on Friday and Saturday nights, and save money on labor on the dark nights. The theater seats 100, and you find that in doing it this way you can sell out the theater. Using this model, how many performances do you need to give of any production to break even?