Chapter 1, Problem 1.41ACT

Using managerial accounting information to manage a Broadway production (Learning Objectives 1 and 2)

REAL LIFE

The Shubert Organization operates 20 theaters, including 17 on Broadway. It has brought hundreds of shows to Broadway over the decades, including The Phantom of the Opera, Cats, and Les Miserables. Several of its shows have been in the news in recent years including:

Mamma Mia!

The Broadway musical Mamma Mia! moved from the Winter Garden Theatre to the Broadhurst Theatre, both of which are on Broadway in New York City. Mamma Mia! will save up to $100,000 per week18 in operating costs due to the Broadhurst’s smaller size; the Broadhurst seats 1,160, while the Winter Garden seats 1,530. Theatre experts estimate the show’s weekly costs to be approximately $600,000 to $700,000, and its weekly ticket sales are usually in the mid-to high-six-figure range.18 ‘“Mamma Mia!’ to Move,” The New York Times, April 18, 2013, retrieved from http://artsbeat.blogs.nytimes.com/2013/04/18/mamma-mia-to-move/ on July 1, 2013.

Once

Once is a Tony Award–winning show on Broadway also produced by the Shubert Organization. Once is a musical about an Irish musician and a Czech immigrant who are drawn together by their shared love of music. Once opened on Broadway in March 2012. The show earned back the amount that the Shubert Organization had invested in it after just 21 weeks (169 performances).19 The show continues its run on Broadway. 19 http://evamere.com/screen-to-stage-musical-transfer-once-recoups-in-record-time/

Memphis

Another Shubert-produced musical, Memphis, is loosely based on the story of a Memphis disc jockey (DJ) who was one of the first white DJs to play black music in the 1950s. Memphis was composed by David Bryan, the keyboard player of the band Bon Jovi. The show opened on Broadway in the Shubert Theatre in October 2009 and won several awards, including four Tony Awards. The Shubert Organization had planned to run Memphis through November 2012, but closed the show in August 2012 because ticket revenues could not support the longer run. Instead of finding another show to use the Shubert Theatre between August 2012 and April 2013, when the show Matilda was scheduled to open, the Shubert Organization decided to use the time to renovate the theater.

Questions

1. 1. For each show that the Shubert Organization produces, what type of financial accounting information would be generated or recorded?
2. 2. What information would producers of Mamma Mia! have needed to make the decision to move the show to a different theatre? What information would be provided by the financial accounting system? What information would be provided by the management accounting system?
3. 3. What information would the producers of Once have needed to calculate that the original investment of the show had been earned? What information would producers need to decide to keep the show open? What information would be provided by the financial accounting system? What information would be provided by the management accounting system?
4. 4. What information would the producers of Memphis have needed to decide to close the show early? What information would the Shubert Organization management have needed to decide to renovate the theater rather than produce another show after Memphis closed its run? What information would be provided by the financial accounting system? What information would be provided by the management accounting system?