A) Based on the data from the previous four months, what is the monthly Fixed Cost from AWS?

B) Based on the data from the previous four months, what is the variable cost of services from AWS? (Please note that you are billed based on streaming hours of service. Streaming hours is your cost driver. Please answer with a number only, with the understanding that your answer is $X.XX/streaming hour).

C) Based on the the expectations from Table 3 and your answers to the previous two questions, what is the expected profit per month of Shudder using the current AWS solution? (Note: please only use the data available to you in this problem, and precede negative numbers with a single -)

D) Based on the data for the in-house solution from Table 1 and the expectations from Table 3, what is the expected profit of Shudder using the proposed in-house solution per month? (Note: please only use the data available to you in this problem, and precede negative numbers with a single -)

E) In October, Shudder was featured on Marketplace with Kai Ryssdal. The result of this publicity was 200,000 additional new users signing up, bringing the new total users to 400,000. Over the month of October, Shudder started noticing that the new users consumed significantly more hours of streaming, bringing the average to 20 hours of streaming per user per month for ALL users. Using these increased user estimates, what is the what would be the profitability of the AWS solution per month? (Note: assume fixed costs are unchanged)

F) Using these increased user estimates, of 200,000 additional new users signing up, bringing the new total users to 400,000 per month, and the increase in the the average to 20 hours of streaming per user per month for ALL users, what would be the profitability of the proposed in-house solution per month? (Note: Please assume that all other portions of the problem (e.g. fixed costs and variable cost rates) remain the same. Please precede negative numbers with a single -)

G) Given the increased user estimates, of 200,000 additional new users signing up, bringing the new total users to 400,000 per month, and the increase in the the average to 20 hours of streaming per user per month for ALL users, should Shudder invest in the in-house solution or continue contracting with AWS? (Note: Ignore building costs and assume the new user-base and consumption will continue at the increased levels.)

H) Provide an argument for your answer to the above question in one or two concise sentences. Assume that capacity constraints will not be a factor for either In-house or AWS solutions.

Shudder is a horror-genre-specific streaming service that currently uses Amazon's Web Services (AWS) to host and stream their movies to customers. AWS charges Shudder for storage of the movie files, and the bandwidth used by their customers, which effectively means AWS charges Shudder $0.40 per hour of streaming every month. Shudder is trying to make a decision of whether to continue with AWS, or to build their own data center. Emily the Engineer gathered the customer viewing data, and found that the 200,000 existing Shudder customers watched 10 hours per month on average. She also noticed that the number of customers and hours they watched were stable over time. Utilizing modern engineering marvels, Emily designed a data-center which would scale with customers and their consumption habits. This meant that Emily's design was expected to cost $2 per user per month. Emily compiled all the data and estimated how much it would cost \textbf{per month} for an in-house solution in line of the current AWS provider, summarized in the table below: Table 1: In-house Fixed Costs $2,000,000 Variable Costs $2 / user Emily is not provided with a break-down of the fixed and variable cost from AWS. However, Shudder has received the following bill from AWS for services that AWS provided over the past 4 months. Note that AWS is based on hours of streaming, not customers. Table 2: Month Streaming Hours Total Invoice Jan 2,000,000 $1,300,000 2,100,000 $1,340,000 Feb March 1,850,000 $1,240,000 April 2,050,000 $1,320,000 The revenue per user, average number of customers, and average customer usage is as follows: Table 3: Revenue $9 / user Number of Customers 200,000 users Customer Usage (average) 10 hours/ user Note: All numbers are per month, all answers should be calculated for a one month period. For the following questions, do not consider growth or other possible future changes unless explicitly asked to do so