Business (AS & A Level) · Oct / Nov 2022 · Paper 23 · Question 1

Pop-up Movies (PM) PM is a private limited company that was set up five years ago. PM shows movies outdoors at night. The movies are projected onto a large screen and temporary seating is provided for the audience. PM hires a venue and then sells tickets. The screen is set up for three nights at each venue. It takes three employees one day to set up the screen and seating, and one day to take it down again. PM uses above the line promotion methods locally for six weeks before showing movies at each venue. Table 1.1 contains data about some of PM’s previous events. Table 1.1: Data about some of PM’s previous events Venue Number of customers Allocated fixed costs Variable costs (per customer) Revenue (per customer) A 1050 $2000 $4 $15 B 600 $2000 $5 $19 C 980 $2000 $4 $15 At each event, PM employs a team of 20 customer service workers to: • show customers to their seats • sell food and drink – PM sells drinks, popcorn and other snacks • assist with parking for those customers who arrive by car (valet parking). The Operations Director has suggested that PM should book larger venues. He thinks that PM would experience economies of scale by doing this. 5 10 15 20

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