An independent cinema network offers a premium monthly subscription pass for £54.00\pounds 54.00£54.00, which includes standard VAT at 20%. The monthly fixed operating costs for the network are £220,000\pounds 220,000£220,000, and it maintains a steady base of 12,000 12,000\,12,000 active monthly subscribers.
In an effort to support the entertainment industry, the government introduces a temporary tax incentive that reduces the VAT rate on cinema admissions and passes from 20% to 8%. If the cinema network decides to keep the retail price of the subscription pass unchanged at £54.00\pounds 54.00£54.00, what will the impact on its monthly profit be?
Increases by £60,000\pounds 60,000£60,000
Increases by £77,760\pounds 77,760£77,760
Increases by £144,000\pounds 144,000£144,000
Remains unchanged
