28_DiscussionQuestions2 - ACCY 302 (Chen) Class 27 Fall...

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ACCY 302 (Chen) Class 27 Fall 2009 Illini Movie Studio The Illini Movie Studio is trying to decide how to distribute its new movie Accountants Gone Wild . The movie has the potential of being a great financial success (a "smash"), but the Illini executives are not sure because the subject is very controversial --- and they have seen some films heralded as "smashes" become "flops" with disastrous financial consequences. The decision facing Illini is whether to initially release the movie Accountants Gone Wild on a limited first run basis. This means that the movie will show only in a few select theaters during the first six months. After six months it will be released generally. If the movie turns out to be a “smash”, this is clearly the best approach because the studio makes considerable profit from these select theaters. The other alternative is to release the film for wide distribution immediately. The profits for these two alternatives are given in the table below, classified in terms of whether the film is a
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