Question
In: Accounting
CableVision has been approached by the City of Mirada to run its cable operations in 2019....
CableVision has been approached by the City of Mirada to run its cable operations in 2019. After negotiating with key parties,CableVision has made the following agreements:
- It will offer Mirada residents a basic set of 25 cable television stations at a rate of $33.99 per month.
- It will pay the city $90,000 per month plus $2.50 per cable subscriber per month to maintain the physical facilities.
- It will actually pay another company an annual fixed fee of $760,000 plus $8.75 per cable subscriber per month to broadcast the 25 channels.
CableVision estimates that operating costs for billing, program news mailings, etc. will be $125,000 per month plus 7% of monthly revenue.
CableVision has several questions about its monthly revenues, costs, and profits in 2019.
Part A
1. What is the estimated monthy contribution margin per cable
subscriber for CableVision in 2019? (20.36)
2. What are the estimated total monthly fixed costs for CableVision in 2019? (278,333)
Part B
1. What is CableVision's estimated monthly operating income in 2019 if 16,000 residents subscribe? (47,427)
2. How many monthly subscribers would be required for CableVision to break even in 2019? (13,670)
3. How many monthly subscribers would be required for CableVision to earn $23,000 per month in 2019? (14,800)
4. Assuming a tax rate of 31%, how many monthly subscribers would be required for CableVision to earn $23,000 per month in 2019?
Part C
Some of CableVision's managers are uncertain about their estimate of monthly fixed operating costs. Assuming that 21,000 residents subscribe, how large can monthly fixed operating costs be for CableVision to still earn $23,000 per month in 2019 (ignore taxes)?
Just Part B question 4 and Part C Please.. I need it ASAP
Solutions
ekkarill92 answered 11 months agoRelated Solutions
CableVision has been approached by the City of Mirada to run its cable operations in 2019....
CableVision has been approached by the City of Mirada to run its
cable operations in 2019. After negotiating with key parties,
CableVision has made the following agreements:
It will offer Mirada residents a basic set of 25 cable
television stations at a rate of $33.99 per month.
It will pay the city $110,000 per month plus $4.00 per cable
subscriber per month to maintain the physical facilities.
It will actually pay another company an annual fixed fee of
$760,000 plus...
CableVision has been approached by the City of Mirada to run its cable operations in 2019....
CableVision has been approached by the City of Mirada to run its
cable operations in 2019. After negotiating with key parties,
CableVision has made the following agreements:
It will offer Mirada residents a basic set of 25 cable
television stations at a rate of $29.99 per month.
It will pay the city $1,300,000 per year plus $3.25 per cable
subscriber per month to maintain the physical facilities.
It will actually pay another company a monthly fixed fee of
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