Break$-$Even Analysis

Media outlets such as ESPN and Fox Sports often have web sites that provide in$-$depth coverage of news and events. Portions of these web

sites are restricted to members who pay a monthly subscription to gain access to exclusive news and commentary. These web sites typically

offer a free trial period to introduce viewers to the web site. Assume that during a recent fiscal year,

ESPN.com spent $$3,022,200$ on a

promotional campaign for its web site, offering 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$)$

$23$ months

Revenue per month per customer subscription

$$17$

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