SRP Ent. (SRP) provides customers in the west of Ireland with packages of satellite television channels on a subscription basis. At present, SRP has 10,000 subscribers for its A Package and 5,000 subscribers for its C Package. The company has two sources of revenue, namely, customers subscriptions and advertising revenue:

Monthly subscription charge, per customer Total monthly advertising revenue (fixed)

Items	A Package (RM)	C Package (RM)
Monthly subscription charge, per customer	50	30
Total monthly advertising revenue (fixed)	50,000	29,000

Each month, SRP Ent. pays commissions to program makers amounting to RM9 for each subscriber to the A Package and RM7 for each subscriber to the C Package.

SRP operates a technical facility for broadcasting each package, and an administrative facility for managing the operations of the company as a whole. The monthly costs of operating these three facilities are as follows:

Cost items	Fixed	Variable
Technical Facility : A Pacakge Technical Facility : C Package Administration Facility	180,000 90,000 70,000	5

A Director of SRP Ent. has pointed out that if the company were to stop offering the C Package, then the company would avoid the fixed costs associated with that packages technical facility. She acknowledges that the advertising and subscription revenue associated with that package would also disappear, but she suggests that this loss of revenue would be at least partly offset by 20% of the C Packages subscribers switching to the A Package.

Required:

a. Calculate the existing monthly Break Even Point (BEP) (in unit only) (assuming no change in the ratio between the number of subscriptions to the A and C Package). Ignore the Directors proposal.

b) Evaluate the effect on monthly profitability of accepting the Directors proposal, on the basis of the data provided.

c) Apart from the financial calculations, suggest two additional reasons why it may be strategically unwise for SRP to discontinue one of its packages.