Please help!!! Theatre Chain B currently sells 5,600 adult’s tickets a week at a
ID: 2620508 • Letter: P
Question
Please help!!!
Theatre Chain B currently sells 5,600 adult’s tickets a week at a price of $8 each and another 3,600 children’s tickets at $3 each. The theater is considering adding a senior’s ticket which would be priced at $5 each. A marketing group has estimated that adding the senior’s ticket would change the weekly ticket sales to 600 senior’s, 5,300 adult’s, and 4,100 children’s tickets. What is the amount of the revenue that should be used in analyzing the addition of the senior’s ticket?
$2,100 $3,000 $4,500 $6,900
Explanation / Answer
Solution:
With the introduction of the Senior's ticket the follwing changes take place in the revenue:
1. Increase in reveune by sale of senior's tickets = ( 600 * $ 5 ) = $ 3000
2. Decrease in sales of adult's tickets from 5600 to 5300.
This will result in loss of revenue on 300 tickets ( 5600 - 5300 ).
Thus decrease in revenue in dollar terms = 300 * $ 8 = $ 2400
3. Increase in sales of children's ticket from 3600 to 4100.
This will increase in revenue by sale of additional 500 tickets ( 4100-3600)
Thus there is an increase in revenue by 500 tickets = 500 * 3 = $ 1500
Thus the net increase in revenue due to the introduction of 600 senior tickets is
= - $ 2500 + $ 3000 + 1500 = $ 2100
Thus the amount of revenue that should be used in analyzing the addition of the 600 senior's ticket is = $ 2100.