ANZflix, a media-services provider, charges subscribers $13.49 per month. To attract more customers, the Management and Product Planning team spents an estimated cost at $52,000 to produce and deploy products across all user interfaces. Also, the Software Engineering team maintains all systems and infrastructure to ensure that members can continue to sign up and watch ANZflix. This maintainance costs ANZflix $56,000 per month. ANZflix uses a server in Taiwan to deliver streaming videos to its subscribers and the facility runs at a cost of $135 per month. Another cost incurred by ANZflix includes $0.02 per GB (GigaByte) of bandwidth to deliver content. In addition, the external studios making the content are paid $0.15 every time for a subscriber watches one program. A typical ANZflix subscriber will watch 30 programs, streaming 65GB of film and TV shows per month. Each subscriber will also cost ANZflix $1.14 per month to maintain their membership. (a) Using the above information, calculate: (i) The break-even number of subscribers per month for ANZflix. (ii) The monthly revenue at break-even. Show all working out including the modelling and solution steps. (b) Provide an EXCEL graph detailing the necessary information to show the break-even points contained in your responses to parts (a) of this question. The graph must illustrate the B.E.P. and the region corresponding to profits and the region corresponding to losses. Your student ID must be included as a part of the title of the graph. (c) How many subscribers are required to obtain a profit of $120,000 per month? What is the monthly revenue for this number of subscribers? Show all working out including the modelling and solution steps. (d) The marketing department is forecasting that if the subscription price is reduced by 10%, Anzflix will attract 35% more subscribers than the current number when monthly profit is $100,000. However, as they don’t have a degree in analysing data they need you to make sure they aren’t making bad recommendations. Calculate the new break-even number of subscribers, the new revenue and thus the new profit for these changes. Show all working out including the modelling and solution steps. (e) What effect does the change in part (d) have on the contribution margin? Explain the effect of this change on the expected break-even number in part (a). Support your justification with calculation of both contribution margins.

Answer rating: 100% (QA)

a To calculate the breakeven number of subscribers per month for ANZflix we need to determine the total costs and the revenue per subscriber Total costs Production and deployment cost 52000 Maintenanc... View the full answer