Question

BUDGETED PROFIT AND LOSS ACCOUNT

Assume that you are working as a Budegt Control Manger in Cinimax Ltd. It has recently a fully equipped theatre and 3 cinema houses at a cost of £ 30 million. The theatre has a capacity of 800 seats nd each cinema has a capacity of 600 seats. Information and projections for the first year of operations are as follows:

1. Fixed administration and maintenance cost of the entire facility is £ 4.5 million per year.

2. The average cost of master print of a Hollywood film is £ 4 million while the cost of master print of a Bollywood film is £ 6.5 million.

3. Two cinema houses are dedicated for Hollywood films which show the same film at the same time while one cinema house will show Bollywood films.

4. Each Bollywood film is displayed for 6 weeks and the average occupancy level is 70%. Each Hollywood film is displayed for 4 weeks and the average occupancy level is 65%. On weekdays, there are 2 shows while on weekends (Sat and Sun), 3 shows are displayed. Ticket price has been fixed at £ 350.

5. Variable cost per show is £ 35,000 and setup cost of each film is £ 500,000.

6. No films would be shown during 8 weeks of the year.

7. Theatre is rented to production houses at £ 60,000 per day. Each play requires setup time of 2 days while rehearsal time needs 1 day. Each play is staged 45 times. One show is staged on weekdays whereas two shows are staged on weekends.

8. There is an interval of 2 days whenever a new play is to be staged.

9. The construction costs of theatre and cinema houses are to be depreciated over a period of 15 years.

10. Assume 52 weeks in a year and 30 days in a month.

Required: Prepare budgeted profit and loss account for the first year.

Answer 1