Netflix experienced some membership turbulence in 2016 as a price increase was phased in for its US subscribers. •In May 2014, Netflix announced that the price of itsstandard subscription service would increase from $8 to $9. However, established customers were allowed to stay at the $7.99 price for two years. In 2015, Netflix increased the standard price to $9.99. •As a result of the pricing plan and the deferred price increase, in May, 2016, the standard pricing plan for long time customers of Netflix increased from $7.99per month to $9.99per month.Netflix began notifying customers in April that the price increase would become effective in the second quarter.Previously Netflix was trying to implement price increases more slowly after a 2011 increase led to negative publicity and a customer backlash. In that case, Netflix separated its streaming and DVD services, and charged separately for both services.However, regardless of the implementationof theprice increase, the higher monthly prices seem to have impacted the growth of membership among US subscribers. In the two quarters before the price increase, Netflix added net membership of 1.6 million and 2.2 million members. By contrast, the number of members added in Q2 was only 160,000, and in Q3 only 400,000. The Q2 growth in US subscribers was the lowest since Netflix began reporting those numbers in 2012.
US Streaming (millions) Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Revenue 1026 1064 1106 1161 1208 1304
Contribution Profit 340 344 379 413 414 475
Contribution Margin 33.1% 32.3% 34.3% 35.6% 34.3% 36.4%
Paid Memberships 41.1 42.1 43.4 45.7 46.0 46.5
Total Memberships 42.3 43.2 44.7 47.0 47.1 47.5
Net Additions 0.90 0.88 1.56 2.23 0.16 0.40
Monthly Revenue per
Paid Member $8.33 $ 8.43 $ 8.49 $ 8.47 $ 8.75 $ 9.40
Percentage Chg.Rev 3.7% 3.9% 5.0% 4.0% 7.9%
Percentage Chg. Memberships 2.5% 3.2% 5.3% 0.6% 0.9%
According to a MarketWatch article1on the price increase:Netflix said Monday that customers who learned in April that the price was about to increase had begun canceling their subscriptions, leading to unexpected “churn.” Netflix did not flat-out say inits letter to investorsthat the price increase led to higher churn among subscribers, however, instead saying it coincided with “press coverage” of the rate hike and that subscribers misunderstood “the news as an impending new price increase rather than the completion of two years of grandfathering.”The stock market reacted to news of Netflix price increase as well. The stock closed at $102.23 as of March 31, 2016. After the release of second quarter earnings in July, the stock price had fallen to $85.84 per share, a decline of 16%. This decline wiped out almost $7 billion of shareholder value during this period. Most of this decline was immediately following the release of the second quarter numbers.With competition increasing in for streaming services, especially with the growth of Amazon Prime Video and Hulu, the decline in membership growth could be a troubling sign.After review of the information above, consider your role as a consultant, and begin to develop a method of explaining what the situation is about. Offer convincing evidence of deep thought, and address the following;
1. Calculate the the price difference from the first quarter to the end of the third quarter. (2 consecutive quarters). You may use the List Price, however this does not reflect the impact over a specific period prior to the increase. Alternatively, you could use the Monthly Revenue Per member and calculate the difference from this provided data.
2. Calculate the change in membership. Estimate the loss in membership from the price increase. Consider the average growth over the four quarters –growth projected (average number of subscribers), and consider the real data of number of subscribers added. How many subscribers have they lost?
3.Anticipate the impact of the price increase to revenue, and marginal cost.Based on the elasticity of demand, and your review of the data, will you advise Netflixto institute another price increase in the next 3 years to support expanded programing?
In: Economics
The unadjusted trial balance of the Manufacturing Equitable at December 31, 2013, the end of its fiscal year, included the following account balances. Manufacturing’s 2013 financial statements were issued on April 1, 2014.
| Accounts receivable | $ | 99,000 | |
| Accounts payable | 35,400 | ||
| Bank notes payable | 698,000 | ||
| Mortgage note payable | 1,315,000 | ||
| Other information: | |
| a. |
The bank notes, issued August 1, 2013, are due on July 31, 2014, and pay interest at a rate of 12%, payable at maturity. |
| b. |
The mortgage note is due on March 1, 2014. Interest at 11% has been paid up to December 31 (assume 11% is a realistic rate). Manufacturing intended at December 31, 2013, to refinance the note on its due date with a new 10-year mortgage note. In fact, on March 1, Manufacturing paid $297,000 in cash on the principal balance and refinanced the remaining $1,018,000. |
| c. |
Included in the accounts receivable balance at December 31, 2013, were two subsidiary accounts that had been overpaid and had credit balances totaling $18,650. The accounts were of two major customers who were expected to order more merchandise from Manufacturing and apply the overpayments to those future purchases. |
| d. |
On November 1, 2013, Manufacturing rented a portion of its factory to a tenant for $36,000 per year, payable in advance. The payment for the 12 months ended October 31, 2014, was received as required and was credited to rent revenue. |
| Required: |
| 1. |
Prepare any necessary adjusting journal entries at December 31, 2013, pertaining to each item of other information (a–d). (Leave no cells blank. If no entry is required, select "No journal entry required" in the account field and enter zero (0) in the amount field. Do not round intermediate calculations.) |
| General Journal | Debit | Credit | |
| a. | (Click to select)Accounts receivableUnearned rent revenueInterest payableNo journal entry requiredAdvances from customersRent revenueCashInterest expense | ||
| (Click to select)Rent revenueUnearned rent revenueCashAdvances from customersAccounts receivableInterest payableInterest expense No journal entry required | |||
| b. | (Click to select)Unearned rent revenueInterest expenseCashNo journal entry requiredAdvances from customersRent revenueAccounts receivableInterest payable | ||
| (Click to select)No journal entry requiredUnearned rent revenueAdvances from customersRent revenueInterest expenseAccounts receivableCashInterest payable | |||
| c. | (Click to select)Unearned rent revenueCashInterest expenseAdvances from customersAccounts receivableNo journal entry requiredRent revenueInterest payable | ||
| (Click to select)Interest expenseInterest payableCashRent revenueNo journal entry requiredAdvances from customersAccounts receivableUnearned rent revenue | |||
| d. | (Click to select)Unearned rent revenueAccounts receivableInterest payableAdvances from customersNo journal entry requiredRent revenueInterest expenseCash | ||
| (Click to select)Rent revenueNo journal entry requiredAdvances from customersCashInterest expenseAccounts receivableInterest revenueUnearned rent revenue | |||
| 2. | Prepare the current and long-term liability sections of the December 31, 2013, balance sheet. (Do not round intermediate calculations.) |
|
Balance Sheet At December 31, 2013 |
|
| Current liabilities: | |
| (Click to select)Bank notes payableAccrued interest payableUnearned rent revenueAdvances from customersCashMortgage note payableCurrent portion of long-term debtAccounts payable | $ |
| (Click to select)Accounts payableUnearned rent revenueAccrued interest payableMortgage note payableCashBank notes payableCurrent portion of long-term debtAdvances from customers | |
| (Click to select)CashAccrued interest payableAdvances from customersMortgage note payableAccounts payableBank notes payableCurrent portion of long-term debtUnearned rent revenue | |
| (Click to select)Current portion of long-term debtMortgage note payableCashUnearned rent revenueBank notes payableAccrued interest payableAccounts payableAdvances from customers | |
| (Click to select)CashAccrued interest payableAdvances from customersBank notes payableMortgage note payableUnearned rent revenueAccounts payableCurrent portion of long-term debt | |
| (Click to select)Accrued interest payableUnearned rent revenueCurrent portion of long-term debtAdvances from customersBank notes payableAccounts payableCashMortgage note payable | |
| Total current liabilities | $ |
| Long-term liabilities | |
| (Click to select)Mortgage note payableCurrent portion of long-term debtBank notes payableAccounts payableAccrued interest payableUnearned rent revenueCashAdvances from customers | $ |
In: Accounting
22. List some of the ecological roles of fungi.
In: Biology
What is segment margin? How is it different from contribution margin? What is the difference between traceable fixed costs and common fixed costs?
Choose a company. Break that company into two separate segments. What are three common fixed costs of the company? What are three traceable fixed costs to each segment?
In: Accounting
What is segment margin? How is it different from contribution margin? What is the difference between traceable fixed costs and common fixed costs?
Choose a company. Break that company into two separate segments. What are three common fixed costs of the company? What are three traceable fixed costs to each segment?
In: Accounting
What is segment margin?
How is it different from contribution
margin?
What is the difference between traceable fixed costs
and common fixed costs?
Choose a company. Break that company into two separate
segments. What are three common fixed costs of the company? What
are three traceable fixed costs to each segment?
In: Accounting
Netflix experienced some membership turbulence in 2016 as a price increase was phased in for its US subscribers. In May 2014, Netflix announced that the price of its standard subscription service would increase from $8 to $9. However, established customers were allowed to stay at the $7.99 price for two years. In 2015, Netflix increased the standard price to $9.99. As a result of the pricing plan and the deferred price increase, in May, 2016, the standard pricing plan for long time customers of Netflix increased from $7.99per month to $9.99per month. Netflix began notifying customers in April that the price increase would become effective in the second quarter. Netflix was trying to implement price increases more slowly after a 2011 increase led to negative publicity and a customer backlash. In that case, Netflix separated its streaming and DVD services, and charged separately for both services. However, regardless of the implementation of the price increase, the higher monthly prices seem to have impacted the growth of membership among US subscribers. In the two quarters before the price increase, Netflix added net membership of 1.6 million and 2.2 million members. By contrast, the number of members added in Q2 was only 160,000, and in Q3 only 400,000. The Q2 growth in US subscribers was the lowest since Netflix began reporting those numbers in 2012.
Netflix Price Increase Hurts Membership
U.S. Streaming (millions) Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Revenue 1026 1064 1106 1161 1208 1304
Contribution Profit 340 344 379 413 414 475
Contribution Margin 33.1% 32.3% 34.3% 35.6% 34.3% 36.4%
Paid Memberships 41.1 42.1 43.4 45.7 46.0 46.5
Total Memberships 42.3 43.2 44.7 47.0 47.1 47.5
NET Additions 0.90 0.88 1.56 2.23 0.16 0.40
Monthly Revenue Per
Paid Member $ 8.33 $ 8.43 $ 8.49 $ 8.47 $ 8.75 $ 9.40
Percentage change Rev. 3.7% 3.9% 5.0% 4.0% 7.9%
Percentage change 2.5% 3.2% 5.3% 0.6% 0.9%
Membership
Source: Netflix 10Q Q3, 2016
According to a MarketWatch article1on the price increase:Netflix said Monday that customers who learned in April that the price was about to increase had begun canceling their subscriptions, leading to unexpected “churn.” Netflix did not flat-out say inits letter to investorsthat the price increase led to higher churn among subscribers, however, instead saying it coincided with “press coverage” of the rate hike and that subscribers misunderstood “the news as an impending new price increase rather than the completion of two years of grandfathering.”The stock market reacted to news of Netflix price increase as well. The stock closed at $102.23 as of March 31, 2016. After the release of second quarter earnings in July, the stock price had fallen to $85.84 per share, a decline of 16%. This decline wiped out almost $7 billion of shareholder value during this period. Most of this decline was immediately following the release of the second quarter numbers.With competition increasing in for streaming services, especially with the growth of Amazon Prime Video and Hulu, the decline in membership growth could be a troubling sign.
1.Use the information on the change in membership, to estimate the own price elasticity for Netflix service.
2.What impact would this price change have on revenue and profits.
3.What concerns do you have regarding the reliability of your elasticity estimate?
4.What information / data would make your analysis better?
In: Accounting
In Born together—Reared apart: the Landmark Minnesota twin study (2012), Nancy Segal discusses the efforts of research psychologists at the University of Minnesota to understand similarities and differences between twins by studying sets of twins who were raised separately. The Excel Online file below contains critical reading SAT scores for several pairs of identical twins (twins who share all of their genes), one of whom was raised in a family with no other children (no siblings) and one of whom was raised in a family with other children (with siblings). Construct a spreadsheet to answer the following questions.
| SAT Score No Siblings | SAT Score With Siblings | Change in SAT Scores (di) |
| 409 | 422 | -13 |
| 620 | 544 | 76 |
| 609 | 601 | 8 |
| 408 | 452 | -44 |
| 383 | 464 | -81 |
| 401 | 535 | -134 |
| 520 | 483 | 37 |
| 663 | 589 | 74 |
| 484 | 444 | 40 |
| 676 | 627 | 49 |
| 613 | 439 | 174 |
| 576 | 651 | -75 |
| 512 | 478 | 34 |
| 601 | 548 | 53 |
| 520 | 540 | -20 |
| 631 | 666 | -35 |
| 525 | 590 | -65 |
| 545 | 617 | -72 |
| 471 | 533 | -62 |
| 597 | 669 | -72 |
A) What is the mean difference between the critical reading SAT scores for the twins raised with no siblings and the twins raised with siblings? (to 2 decimals)
B) Provide a 90% confidence interval estimate of the mean difference between the critical reading SAT scores for the twins raised with no siblings and the twins raised with siblings. (to 2 decimals)
C) Conduct a hypothesis test of equality of the critical reading SAT scores for the twins raised with no siblings and the twins raised with siblings.
P-Value = ? (to 4 decimals)
At alpha = .01 what is your conclusion?
Can/Cannot we conclude that there is a difference between the mean scores for the no sibling and with sibling groups?
In: Statistics and Probability
In: Other
While attempting to measure its risk exposure for the upcoming year, an insurance company notices a trend between the age of a customer and the number of claims per year. It appears that the number of claims keep going up as customers age. After performing a regression, they find that the relationship is (claims per year) = 0.36*(age) + 5.43. If a customer is 38 years old and they make an average of 14.58 claims per year, what is the residual?
| 1)-23.42 | |
| 2)-4.53 | |
| 3)4.53 | |
| 4)23.42 | |
| 5)18.89 |
In: Statistics and Probability