The City of Mirada wants to offer cable television to its residents in 2012. The
ID: 2344734 • Letter: T
Question
The City of Mirada wants to offer cable television to its residents in 2012. 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 $105,000 per month plus $4.00 per cable subscriber per month.
CableVision will actually pay another company to broadcast the 25 channels and will pay this company an annual fixed fee of $730,000 plus a monthly amount of $7.75 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 $110,000 per month, and a variable component of 9.0% of monthly revenue.
CableVision has several questions about its monthly revenues, costs, and profits in 2012.
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 2012?
Incorrect on #1
2. What are the estimated total monthly fixed costs for CableVision in 2012?
Incorrect on #2
Explanation / Answer
I think you are sanjay, and i think i helped you with part A (1 & 2) earlier. So I am not recalculating some of the numbers. But I will reference them here.
3) MOI = CM * (18000) - TCF
MOI = 17.82 (18000) - 275,833 = 44,927
4) (CM)x - TCF = 0
(17.82)x - 275,833 = 0
17.82x = 275,833
x = 15479.85 = 15,479
5) (CM)x - TCF = 23,000
17.82x -275,833 = 23,000
17.82x = 298833
x = 16,769.52 = 16,770
6) P(1-0.3) = 23,000
.7P = 23,000
P = 32857.14