Cliff suspects that Dave may be trying to murder him. Arlo tries to boost employee morale by taking his staff to laughter therapy, and Sacha engages in a turf war against two children.

Arlo sinks deeper into insanity and tries to cancel his own show. Mr. Chronis opens up a dinner theater, and Dave seeks revenge.

Dave looks back at the horrific beginnings of his new job as a production assistant for the local low-budget kids' TV show "Magic Funhouse," hosted by a demanding manchild.

"The Magic Funhouse!" cast and crew find themselves before a judge on live court TV as they describe the events over the past six months the way they remember them.

Arlo storms off the set during a live broadcast after Dr. Pottymouth says a word that triggers a painful childhood memory. Meanwhile, Cliff plans a porn premiere party.

Mr. Chronis forces the gang to swap identities with each other in competition for a raise. Breaking character gets you Tasered ans puts you out of the competition.

A shadow from Manjusha's past comes back to haunt her. Meanwhile, Cliff professes his love for another staff member, and we learn the history of "Magic Funhouse!"