How cost of producing and promoting movie affect decision

Assignment Help Accounting Basics

Reference no: EM131816510

Question: DVD Sales and Rental Markets Is it more profitable to sell your product for $45 or $12? This is a difficult question for many movie studio executives. Consider a movie that cost $60 million to produce and required another $30 million to promote. After its theater release, the studio must determine whether to sell DVDs directly to the public at a wholesale price of about $12 per DVD or to sell to video rental store distributors for about $45 per DVD. The distributors will then sell to about 13,000 video rental stores in the United States. Assume that the variable cost to produce and ship 1 DVD is $2.00.

1. Suppose each video rental store would purchase 5 DVDs of this movie. How many DVDs would need to be sold directly to customers to make direct sales a more profitable option than sales to video store distributors?

2. How does the cost of producing and promoting the movie affect this decision?

3. Walt Disney Co. elected to sell The Lion King directly to consumers, and it sold 33 million copies at an average price of $12.30 per DVD. How many DVDs would each video rental store have to purchase to provide Disney as much profit as the company received from direct sales? Assume that Disney would receive $45 per DVD from the distributors.

Reference no: EM131816510

Questions Cloud

Stemplot for ages at death : The mean age at death is 15 years and the standard deviation is 7 years. What percentage of the dinosaurs' ages were within 1 standard deviation of the mean?

Prepare a tabulation of the performance for the full year : Prepare a tabulation of the performance for the full year including the final course. Assume that the costs of the final course for the 30 enrollees'.

Display the data with a histogram : Here are data for per capita beer consumption (in liters per person per year) in 18 countries during 2002.18

Calculate each of the four cost category groupings : calculating the sum for each separate cost category shown, and be aware it's likely that more than one expense item will apply in each calculation

How cost of producing and promoting movie affect decision : DVD Sales and Rental Markets Is it more profitable to sell your product for $45 or $12? This is a difficult question for many movie studio executives.

Calculate golden gate construction weighted-average cost : The cost of Golden Gate's equity capital is 15 percent. Calculate Golden Gate Construction Associates' weighted-average cost of capital

Clear majority in the sample : Your answer to part (b) indicates that a clear majority in the sample were able to match correctly for the purebred dogs.

Discuss two things that are a result of the job analysis : According to the reading, company has a financial obligation to its employees. Identify and discuss in detail two things that are a result of the job analysis.

Software to report the percentage : Access the student survey data, completed by 446 students in introductory statistics courses at a large university in the fall of 2003.

User Account

All Pages