Leos Four Plex Theatre Case

Topics: Admission to an event or establishment Pages: 1 (561 words) Published: June 14, 2015
0Case Study – Leo’s Four-Plex Theatre (Merchant & Van der Stede, 3rd ed) Leo’s Four-Plex Theatre was a single-location, four screen theatre located in a small town in west Texas. Leo Antonelli bought the theatre a year ago and hired Bill Reilly, his nephew, to manage it. Leo was concerned, however, because the theatre was not as profitable as he had thought it would be. He suspected the theatre had some control problems and asked Park Cockerill, an accounting professor at a college in the adjacent town, to study the situation and provide suggestions. Park found the following:

1.Customers purchased their tickets at one of two ticket booths located at the front of the theatre. The theatre used general admission (not assigned) seating. The tickets were colour coded to indicate which movie the customer wanted to see. The tickets were also dated and stamped “good on day of sale only”. The tickets at each price (adult, child, matinee, evening) were prenumbered serially, so that the number of tickets sold each day at each price for each movie could be determined by subtracting the number of the first ticket sold from the ending number.

2.The amounts of cash collected were counted daily and compared with the total value of tickets sold. The cash counts revealed, almost invariably, less cash than the amounts that should have been collected. The discrepancies were usually small, less than $10 per cashier. However, on one day two weeks before Park’s study, one cashier was short by almost $100.

3.Just inside the theatre’s front doors was a lobby with a refreshment stand. Park observed the refreshment stand’s operations for a while. He noted that most of the stand’s attendants were young, probably of high school or college age. They seemed to know many of the customers, a majority of whom were of similar ages, which was not surprising given the theatre’s small-town location. But the familiarity concerned Park...
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