help with req 3

Is it more profitable to sell your product for $50 or $15? This is a difficult question for many movie studio executives. Consider a movie that cost $75 million to produce and required another $30 million to promote. After its theater release, the studio must determine whether to sell DVDs directly to the public at a wholesale price of about $15 per DVD or to sell to video rental store distributors for about $50 per DVD. The distributors will then sell to about 20,000 video rental stores in the United States. Assume that the variable cost to produce and ship 1 DVD is $5.00. Total CM from sales to distributors = 1 1 $ CM per direct sale DVD 10 Min. # of DVD sales to direct customers 450,000 $ 4,500,000 Requirement 2. How does the cost of producing and promoting the movie affect this decision? O A. The cost to promote the movie, which is a discretionary cost, is irrelevant to the decision. The minimum number of DVD sales to direct customer will fluctuate proportionately, however, with the cost of producing the movie. If the cost are less, fewer number of DVDs will need to be sold to direct customers, where if the cost is higher, a great number of DVDs will need to be sold to direct customers. The cost of producing and promoting the movie is irrelevant to this decision. B. O C. The minimum number of DVD sales to direct customer will fluctuate proportionately with the cost of producing and promoting the movie. If the cost are less, fewer number of DVDs will need to be sold to direct customers, where if the cost is higher, a great number of DVDs will need to be sold to direct customers. Requirement 3. 20th Century Fox elected to sell Juno directly to consumers, and it sold 30 million copies at an average price of $15.50 per DVD. How many DVDs would each video rental store have to purchase to provide 20th Century Fox as much profit as the company received from direct sales? Assume that 20th Century Fox would receive $50 per DVD from the distributors. Select the formula needed, and then enter the amounts to calculate how many DVDs the company would need o sell to each video rental store (distributor) to make as much profit as direct sales. (Abbreviations used: CM = contribution margin, Min. # - Minimum Number. Round your answer up to the nearest whole number.) Min. # of DVD Total CM from direct sales CM per distributor DVD = sales per store Number of stores 20000