Cablevision has been approached by the City of Miranda to run its cable operations in 2023. 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 $46.50 per month. It will pay the city $1,400,000 per year plus $4.12 per cable subscriber per month to maintain the physical facilities. It will pay another company a monthly fixed fee of $70,000 plus $8.25 per cable subscriber per month to broadcast the 25 channels. CableVision estimates that operating costs for billing, program news mailings, etc. will be $125,000 per month plus 8% of monthly revenue. CableVision has several questions about its monthly revenues, costs, and profits in 2023. 1. Assuming a tax rate of 32%, how many monthly subscribers would be required for CableVision to earn $297,000 per month in 2023? 2. Some of CableVision's managers are uncertain about their estimate of monthly fixed operating costs. Assuming that 20,000 residents subscribe, how large can monthly fixed operating costs be for CableVision to still earn $210,000 per month in 2023 (ignore taxes)? Can someone explain how to solve these problems? Thanks!

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Cablevision has been approached by the City of
Miranda to run its cable operations in 2023. 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 $46.50 per month.
It will pay the city $1,400,000 per year plus $4.12
per cable subscriber per month to maintain the
physical facilities.
It will pay another company a monthly fixed fee of
$70,000 plus $8.25 per cable subscriber per month
to broadcast the 25 channels.
CableVision estimates that operating costs for
billing, program news mailings, etc. will be
$125,000 per month plus 8% of monthly revenue.
CableVision has several questions about its
monthly revenues, costs, and profits in 2023.
1. Assuming a tax rate of 32%, how many monthly
subscribers would be required for CableVision to
earn $297,000 per month in 2023?
2. Some of CableVision's managers are uncertain
about their estimate of monthly fixed operating
costs. Assuming that 20,000 residents subscribe,
how large can monthly fixed operating costs be
for CableVision to still earn $210,000 per month in
2023 (ignore taxes)?
Can someone explain how to solve these
problems? Thanks!
Transcribed Image Text:Cablevision has been approached by the City of Miranda to run its cable operations in 2023. 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 $46.50 per month. It will pay the city $1,400,000 per year plus $4.12 per cable subscriber per month to maintain the physical facilities. It will pay another company a monthly fixed fee of $70,000 plus $8.25 per cable subscriber per month to broadcast the 25 channels. CableVision estimates that operating costs for billing, program news mailings, etc. will be $125,000 per month plus 8% of monthly revenue. CableVision has several questions about its monthly revenues, costs, and profits in 2023. 1. Assuming a tax rate of 32%, how many monthly subscribers would be required for CableVision to earn $297,000 per month in 2023? 2. Some of CableVision's managers are uncertain about their estimate of monthly fixed operating costs. Assuming that 20,000 residents subscribe, how large can monthly fixed operating costs be for CableVision to still earn $210,000 per month in 2023 (ignore taxes)? Can someone explain how to solve these problems? Thanks!
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 3 images

Blurred answer
Knowledge Booster
Accounting for Long-Term contracts
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education