Is it more profitable to sell your product for $52 or $12? This is a difficult question for many movie studio executives. Consider a movie that cost $80 million to produce and required another $15 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 $12 per DVD or to sell to video rental store distributors for about $52 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 $2.00. Read the requirements. Requirement 1. Suppose each video rental store would purchase 7 DVDs of this movie. How many DVDs would need to be sold directly to customers to make direct sales a more profitable option than sales to video store distributors? Select the formula needed, and then enter the amounts to calculate how many DVDs the company would need to sell directly to customers to make direct sales a more profitable option than sales to video store distributors. (Abbreviations used: CM = contribution margin, Min. # - Minimum Number. Round your answer up to the nearest whole number.) Total CM from sales to distributors 1 CM per direct sale DVD Min. # of DVD sales to direct customers Requirements 1 1. Suppose each video rental store would purchase 7 DVDs of this movie. How many DVDs would need to be sold directly to customers to make direct sales a more profitable option than sales to video store distributors? 2. How does the cost of producing and promoting the movie affect this decision? 3. MGM Studios elected to sell The Wizard of Oz directly to consumers, and it sold 25 million copies at an average price of $13.00 per DVD. How many DVDs would each video rental store have to purchase to provide MGM as much profit as the company received from direct sales? Assume that MGM would receive $52 per DVD from the distributors. Print Done