Break-Even Analysis Media outlets such as ESPN and FOX Sports often have websites that provide in-depth coverage of news and events. Portions of these websites are restricted to members who pay a monthly subscription to gain access to exclusive news and commentary. These websites typically offer a free trial period to introduce viewers to the websites. Assume that during a recent fiscal year, ESPN.com spent $4,200,000 on a promotional campaign for the ESPN.com websites that offered two free months of service for new subscribers. In addition, assume the following information: Number of months an average new customer stays with the service (including the two free months) Revenue per month per customer subscription Variable cost per month per customer subscription Determine the number of new customer accounts needed to break even on the cost of the promotional campaign. In forming your answer, (1) treat the cost of the promotional campaign as a fixed cost, and (2) treat the revenue less variable cost per account for the subscription period as the unit contribution margin. accounts mont $10. $5.
Break-Even Analysis Media outlets such as ESPN and FOX Sports often have websites that provide in-depth coverage of news and events. Portions of these websites are restricted to members who pay a monthly subscription to gain access to exclusive news and commentary. These websites typically offer a free trial period to introduce viewers to the websites. Assume that during a recent fiscal year, ESPN.com spent $4,200,000 on a promotional campaign for the ESPN.com websites that offered two free months of service for new subscribers. In addition, assume the following information: Number of months an average new customer stays with the service (including the two free months) Revenue per month per customer subscription Variable cost per month per customer subscription Determine the number of new customer accounts needed to break even on the cost of the promotional campaign. In forming your answer, (1) treat the cost of the promotional campaign as a fixed cost, and (2) treat the revenue less variable cost per account for the subscription period as the unit contribution margin. accounts mont $10. $5.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![ak-Even Analysis
dia outlets such as ESPN and FOX Sports often have
osites that provide in-depth coverage of news and
ents. Portions of these websites are restricted to
mbers who pay a monthly subscription to gain access
exclusive news and commentary.
ese websites typically offer a free trial period to
duce viewers to the websites. Assume that during a
ent fiscal year, ESPN.com spent $4,200,000 on a
motional campaign for the ESPN.com websites that
ered two free months of service for new subscribers.
addition, assume the following information:
mber of months an average new customer stays
h the service
cluding the two free months)
14
months
venue per month per customer subscription
iable cost per month per customer subscription
termine the number of new customer accounts
eded to break even on the cost of the promotional
mpaign. In forming your answer, (1) treat the cost of
promotional campaign as a fixed cost, and (2) treat
revenue less variable cost per account for the
scription period as the unit contribution margin.
accounts
$10.00
$5.00](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe8dbb38b-67db-4869-a2fb-b3f37c286b0c%2Fdd35d36c-f4d7-495f-846e-7c20805802b0%2F2u4pgsn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:ak-Even Analysis
dia outlets such as ESPN and FOX Sports often have
osites that provide in-depth coverage of news and
ents. Portions of these websites are restricted to
mbers who pay a monthly subscription to gain access
exclusive news and commentary.
ese websites typically offer a free trial period to
duce viewers to the websites. Assume that during a
ent fiscal year, ESPN.com spent $4,200,000 on a
motional campaign for the ESPN.com websites that
ered two free months of service for new subscribers.
addition, assume the following information:
mber of months an average new customer stays
h the service
cluding the two free months)
14
months
venue per month per customer subscription
iable cost per month per customer subscription
termine the number of new customer accounts
eded to break even on the cost of the promotional
mpaign. In forming your answer, (1) treat the cost of
promotional campaign as a fixed cost, and (2) treat
revenue less variable cost per account for the
scription period as the unit contribution margin.
accounts
$10.00
$5.00
![Break-Even Analysis
Media outlets such as ESPN and FOX Sports often have
websites that provide in-depth coverage of news and
events. Portions of these websites are restricted to
members who pay a monthly subscription to gain access
to exclusive news and commentary.
These websites typically offer a free trial period to
introduce viewers to the websites. Assume that during a
recent fiscal year, ESPN.com spent $4,200,000 on a
promotional campaign for the ESPN.com websites that
offered two free months of service for new subscribers.
In addition, assume the following information:
Number of months an average new customer stays
with the service
(including the two free months)
Revenue per month per customer subscription
Variable cost per month per customer subscription
Determine the number of new customer accounts
needed to break even on the cost of the promotional
campaign. In forming your answer, (1) treat the cost of
the promotional campaign as a fixed cost, and (2) treat
the revenue less variable cost per account for the
subscription period as the unit contribution margin.
accounts
mont
$10.
$5.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe8dbb38b-67db-4869-a2fb-b3f37c286b0c%2Fdd35d36c-f4d7-495f-846e-7c20805802b0%2F0owtowo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Break-Even Analysis
Media outlets such as ESPN and FOX Sports often have
websites that provide in-depth coverage of news and
events. Portions of these websites are restricted to
members who pay a monthly subscription to gain access
to exclusive news and commentary.
These websites typically offer a free trial period to
introduce viewers to the websites. Assume that during a
recent fiscal year, ESPN.com spent $4,200,000 on a
promotional campaign for the ESPN.com websites that
offered two free months of service for new subscribers.
In addition, assume the following information:
Number of months an average new customer stays
with the service
(including the two free months)
Revenue per month per customer subscription
Variable cost per month per customer subscription
Determine the number of new customer accounts
needed to break even on the cost of the promotional
campaign. In forming your answer, (1) treat the cost of
the promotional campaign as a fixed cost, and (2) treat
the revenue less variable cost per account for the
subscription period as the unit contribution margin.
accounts
mont
$10.
$5.
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