Question

just help for the part C thanks

ableVision has been approached by the City of Mirada to run its cable operations in 2020. 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 $33.99 per month. • It will pay the city $1,400,000 per year plus $3.75 per cable subscriber per month to maintain the physical facilities. • It will actually pay another company a monthly fixed fee of $65,000 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 $120,000 per month plus 9% 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? $19.68 2. What are the estimated total monthly fixed costs for CableVision in 2020? $301,667 You are correct. Your receipt no. is 156-6637 Previous Tries Your answers are correct, but just to make sure that there are no rounding issues, use $19.68 for the estimated contribution margin per subscriber and $301,667 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 if 18,000 residents subscribe? $52,573 2. How many monthly subscribers would be required for CableVision to break even in 2020? 15,329 3. How many monthly subscribers would be required for CableVision to earn $20,000 per month in 2020? 16,345 4. Assuming a tax rate of 33%, how many monthly subscribers would be required for CableVision to earn $20,000 per month in 2020? 16,845 You are correct. Your receipt no. is 156-1639 Previous Tries Part C (4 tries; 4 points). Some of CablevVision's managers are uncertain about their estimate of monthly fixed operating costs. Assuming that 22,000 residents subscribe, how large can monthly fixed operating costs be for CableVision to still earn $20,000 per month in 2020 (ignore taxes)? 266200 Incorrect. Tries 3/4 Previous Tries Submit Answer

Answer 1

Total contribution margin earned = Number of Subscribers*Contribution Margin per Subscriber

= 22000*19.68

= $432,960

Less: Desired Income = $20,000

Less: Fixed cost of physical facilities = $1,400,000/12 = $116,666.67

Less: Fixed cost of broadcast = $65000

Maximum fixed operating cost = $231,293.33