Break-even subscribers for a video serviceStar Stream is a subscription-based video streaming service. Subscribers pay $120 per year for the service. Star Stream licenses and develops contentfor its subscribers. In addition, Star Stream leases servers to hold this content. These costs are not variable to the number of subscribers, but must beincurred regardless of the subscriber base. In addition, Star Stream compensates telecommunication companies for bandwidth so that Star Streamcustomers receive fast streaming services. These costs are variable to the number of subscribers. These and other costs are as follows: Enter youranswers in whole dollars.Server lease costs per year$ 100,000,000Content costs per year2,000,000,000Fixed operating costs per year900,000,000Bandwidth costs per subscriber per year15Variable operating costs per subscriber per year25a. Determine the break-even number of subscribers.X subscribersb. Assume Star Stream planned to increase available programming and thus increase the annual content costs to $2,600,000,000. What impact wouldthis change have on the break-even number of subscribers?Break-even number of subscribers willtosubscribers.c. Assume the same content cost scenario in (b). How much would the annual subscription need to change in order to maintain the same break-even asin (a)?The annual subscription need tofrom $to $in order to maintain the same break-even as in(a).

Fixed costs Amount in $ Server lease costs per year 100000000 Content cost per year 2000000000…

Answered: break-even number of subscribers

Business

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break-even number of subscribers

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Break-even subscribers for a video service
Star Stream is a subscription-based video streaming service. Subscribers pay $120 per year for the service. Star Stream licenses and develops content
for its subscribers. In addition, Star Stream leases servers to hold this content. These costs are not variable to the number of subscribers, but must be
incurred regardless of the subscriber base. In addition, Star Stream compensates telecommunication companies for bandwidth so that Star Stream
customers receive fast streaming services. These costs are variable to the number of subscribers. These and other costs are as follows: Enter your
answers in whole dollars.
Server lease costs per year
$ 100,000,000
Content costs per year
2,000,000,000
Fixed operating costs per year
900,000,000
Bandwidth costs per subscriber per year
15
Variable operating costs per subscriber per year
25
a. Determine the break-even number of subscribers.
X subscribers
b. Assume Star Stream planned to increase available programming and thus increase the annual content costs to $2,600,000,000. What impact would
this change have on the break-even number of subscribers?
Break-even number of subscribers will
to
subscribers.
c. Assume the same content cost scenario in (b). How much would the annual subscription need to change in order to maintain the same break-even as
in (a)?
The annual subscription need to
from $
to $
in order to maintain the same break-even as in
(a).

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Help question 37
i have the answer but i want to know why?
Increasing variable cost while decreasing fixed cost