Answered step by step
Verified Expert Solution
Question
1 Approved Answer
This problem contains three parts. In Part A, you are asked to determine the parameters of the profit function- the contribution margin and the
This problem contains three parts. In Part A, you are asked to determine the parameters of the profit function- the contribution margin and the fixed costs. You shoul move on to Parts B and C until you get Part A correct, or until you use up all of your tries. The correct profit function parameters will be given to you after you have con Part A you should use these parameters in Parts B and C. The problem is worth 20 points, Parts A and B are worth eight points each; Part C is worth four points. To get the eight points for Part A, you must answer both questio correctly; to get the eight points for Part B, you must answer all four questions correctly. You get eight tries on Part A, eight on Part B, and four on Part C. Cablevision has been approached by the City of Mirada to run its cable operations in 2023. 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 $50.25 per month. It will pay the city $105,000 per month plus $5.25 per cable subscriber per month to maintain the physical facilities. It will pay another company an annual fixed fee of $760,000 plus $8.50 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 2023. REQUIRED (ROUND YOUR ANSWER TO PART A, QUESTION 1 TO THE NEAREST CENT, ROUND ALL OTHER ANSWERS TO THE NEAREST UNIT OR NEAREST DOLLAR.] Part A (8 tries: 8 points) 1. What is the estimated monthy contribution margin per cable subscriber for Cablevision in 2023? 2. What are the estimated total monthly fixed costs for Cablevision in 2023? Submit Answer Tries 0/8 Part B (8 tries; 8 points) 1. What is Cablevision's estimated monthly operating income in 2023 if 20,000 residents subscribe? 2. How many monthly subscribers would be required for Cablevision to break even in 2023? 3. Assuming a tax rate of 31%, how many monthly subscribers would be required for Cablevision to earn $346,000 per month in 2023? Part C (4 tries; 4 points) Some of CableVision's managers are uncertain about their estimate of monthly fixed operating costs. Assuming that 17,000 residents subscribe, how large can monthly fixes operating costs befor Cablevision to stil earn $240,000 per month in 2023 (ignore taxes)? Tries 0/4
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started