What is the estimated monthly contribution margin per cable

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Reference no: EM132234261

Question - CableVision has been approached by the City of Mirada to run its cable operations in 2019. 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 $33.49 per month.
  • It will pay the city $1,300,000 per year plus $4.00 per cable subscriber per month to maintain the physical facilities.
  • It will actually pay another company a monthly fixed fee of $60,000 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 $110,000 per month plus 7% of monthly revenue.

CableVision has several questions about its monthly revenues, costs, and profits in 2019.

What is the estimated monthly contribution margin per cable subscriber for CableVision in 2019?

Reference no: EM132234261

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