Break-even Analysis: It refers to an analysis of the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows: Break-even point in Sales ( units ) = Fixed Costs Contribution Margin per unit the number of new customer accounts needed to break even on the cost of the promotional campaign.

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Chapter 19, Problem 19.15EX

To determine

Break-even Analysis: It refers to an analysis of the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

the number of new customer accounts needed to break even on the cost of the promotional campaign.

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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 site. Assume that during a recent fiscal year, ESPN.com spent $4,200,000 on a promotional campaign for the ESPN.com website 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) 14 months Revenue per month per customer subscription $10.00 Variable cost per month per customer subscription $5.00 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…