CableVision has been approached by the City of Mirada to run its cable operations in 2016. 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 $33.49 per month.

CableVision will pay the city $85,000 per month plus $2.50 per cable subscriber per month to maintain the physical facilities.

CableVision will actually pay another company an annual fixed fee of $730,000 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 9% of monthly revenue.

CableVision has several questions about its monthly revenues, costs, and profits in 2016.

Questions:

1. Assuming a tax rate of 34%, what must revenue be in order for CableVision to earn $21,000 per month in 2016?

2. Some of CableVision's managers are uncertain about their estimate of monthly fixed operating costs. Assuming that 22,000 residents subscribe, how large can monthly fixed operating costs be for CableVision to still earn $21,000 per month in 2016 (ignore taxes)?

Part A (6 tries; 8 points) 1. What is the estimated monthly contribution margin per cable subscriber for CableVision in 201? 19.2300 2. What are the estimated total monthly fixed costs for CableVision in 2016? 270833 You are correct. Previous Tries Your receipt no. is 150-5356 Your answers are correct, but just to make sure that there are no rounding issues, use $19.23 for the estimated contribution margin per subscriber and $270,833 for the estimated monthly fixed costs in Parts B and C Part B (8 tries; 8 points) 1. What is CableVision's estimated monthly operating income in 2016 if 20,000 residents subscribe? #3 IS CORRECT 113767 2. How many monthly subscribers would be required for CableVision to break even in 2016? #4 IS CORRECT 14084 3. How many monthly subscribers would be required for CableVision to earn $21,000 per month in 2016? 15176 #5 IS CORRECT 4. Assuming a tax rate of 34%, what must revenue be in order for CableVision to earn $21,000 per month in 2016? #6 IS INCORRECT-the answer you submitted the contribution margin necessary to reach the profit goal, but the question asks for the revenue necessary to reach the profit goal Submit Answer Incorrect. Tries 3/8 Previous Tries Part C (4 tries; 4 points) Some of CableVision's managers are uncertain about their estimate of monthly fixed operating costs. Assuming that 22,000 residents subscribe, how large can monthly fixed operating costs be for CableVision to still earn $21,000 per month in 2016 (ignore taxes)? 402060 Incorrect on #7 The question is asking how large monthly operating fixed costs can be, not monthly total fixed costs