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Cost Volume Profit




Question;The City;of Mirada wants to offer cable television to its residents in 2013. The city;has approached a company called CableVision to run its cable operations. After;negotiating with key parties, CableVision has made the following agreements;?;Mirada will offer;its residents a basic set of 25 cable television stations at a rate of $32.49;per month (all of the revenue will go to CableVision).;?;?;The City of;Mirada will maintain the physical facilities, and CableVision will pay the city;$1,200,000 per year plus $3.75 per cable subscriber per month.;?;?;CableVision will;actually pay another company to broadcast the 25 channels and will pay this;company a monthly fixed fee of $60,000 plus a monthly amount of $8.00 per cable;subscriber per month.;?;CableVision;will incur additional operating costs for billing, program news mailings, etc.;These costs will include a fixed component of $115,000 per month, and a;variable component of 8.5% of monthly revenue.;CableVision;has several questions about its monthly revenues, costs, and profits in 2013.;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;1. What is;the estimated monthly contribution margin per cable subscriber for CableVision;in 2013?;2. What;are the estimated total monthly fixed costs for CableVision in;2013?;Tries;0/8;Part;B;3. What is;CableVision's estimated monthly operating income if 17,000 residents;subscribe?;4. How;many monthly subscribers would be required for CableVision to break even in;2013?;5. How;many monthly subscribers would be required for CableVision to earn $23,000 per;month in 2013?;6.;Assuming a tax rate of 31%, what must revenue be in order for CableVision to;earn $23,000 per month in 2013?


Paper#44796 | Written in 18-Jul-2015

Price : $22