Question

Answer 406810 for Part C is not correct

ablcVision has been approached by the City of Mirada to run its cable operations in 2020. After negotiating with key partics, CableVision has made the following agreements: It will offer Mirada residents a basic set of 25 cable television stations at a rate of $33.99 per month. . It will pay the city $1,300,000 per year plus $3.50 per table subscriber per month to maintain the physical facilities. . It will actually pay another company a monthly fixed fee of $50,000 plus $7.50 per cable subscriber per month to broadcast the 25 channels. CableVision estimates that operating costs for billing, program news mailings, etc. will be $115,000 per month plus 7% of monthly revenue. CableVision has several questions about its monthly revenues, costs, and profits in 2020. 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 2020? $20.61 2. What are the estimated total monthly fixed costs for Cablevision in 2020? $273,333 TE ! SE5 156-84817 Your answers are correct, but just to make sure that there are no rounding issues, use $20.61 for the estimated contribution margin per subscriber and $273,333 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 2020 ir 19,000 residents subscribe7 $118,257 2. How many monthly subscribers would be required for CableVision to break even in 20207 13,262 3. How many monthly subscribers would be required for Cable Vision to carn $26,000 per month in 20202 14,524 4. Assuming a tax rate of 31%, how many monthly subscribers would be required for CableVision to cam $26,000 per month in 2020? 15,090 E ! SASTERS 156-97982 Part (4 tries 4.roints) Some of CableVision's managers are uncertain about their estimate of monthly fixed operating costs. Assurning that 21,000 residents subscribe, how large cen monthly fixed operating costs be for CableVision to still earn 526,000 per month in 2020 (ignore taxes)? UZEX i Tries 3/5

Answer 1

	Part C:
	Target fixed operating cost:
						$	$
	Subscription revenue			(21000*33.99)			713790
	Less:
	Payment to city
	Fixed			(1300000/12)		108333
	Variable			(21000*3.50)		73500
	Payment to company
	Fixed			(50000/12)		4167
	Variable			(21000*7.50)		157500
	Variable operating cost			(713790*7%)		49965
	Target profit					26000	419466
	Target fixed operating cost:						294324