Analyze Star Streams cost-volume-profit relationships

Star Stream is a subscription-based video streaming service. Subscribers pay $120 per year for the service. Star Stream licenses and develops content for its subscribers. In addition, Star Stream leases servers to hold this content. These costs are not variable to the number of subscribers, but must be incurred regardless of the subscriber base. In addition, Star Stream compensates telecommunication companies for bandwidth so that Star Stream customers receive fast streaming services. These costs are variable to the number of subscribers. These and other costs are as follows: Enter your answers in whole dollars.

Line Item Description	Amount
Server lease costs per year	$ 100,000,000
Content costs per year	2,000,000,000
Fixed operating costs per year	900,000,000
Bandwidth costs per subscriber per year	15
Variable operating costs per subscriber per year	25

a. Determine the break-even number of subscribers. fill in the blank 1 of 1 subscribers

b. Assume Star Stream planned to increase available programming and thus increase the annual content costs to $2,600,000,000. What impact would this change have on the break-even number of subscribers? Break-even number of subscribers will fill in the blank 1 of 2

decreaseincreaseincrease

to fill in the blank 2 of 2 subscribers.

c. Assume the same content cost scenario as in (b). How much would the annual subscription need to change in order to maintain the same break-even as in (a)? The annual subscription need to fill in the blank 1 of 3

decreaseincreaseincrease

from fill in the blank 2 of 3$ to fill in the blank 3 of 3$ in order to maintain the same break-even as in (a).