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ACT is thinking about installing digital projection equipment. This type of advanced technology would help the theatre differentiate itself from its competitors. This projection equipment would allow the theatre to offer a premium movie viewing experience to its audience and show 3D movies, meaning higher ticket prices. Also, the new equipment would raise variable acquisition costs. However, the equipment would increase fixed costs by $350,000, which represent one time purchase and installation costs. This alternative is exclusive of alternative 1 -so use the original financial information from page 1 (also shown below) to calculate the effects of the new equipment. Additional Information: This alternative would allow ACT to increase their ticket prices to $17.50 and would increase the variable cost per unit by $1.50. Assume ticket sales remain at 80,000 . 4/ternative 2 Requirements (continued) 6.) Assume that the company expects ticket sales to decline 20% next year with no change in ticket price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown above (assume a 32% tax rate, and that any loss before taxes yields a 32% tax savings). 7.) Assume that the company expects ticket sales to increase 20% next year with no change in ticket price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown above (assume 32% tax rate, and that any loss before taxes yields a 32% tax savings)

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