ANZflix, a media-services provider, charges subscribers $13.49per month. To attract more customers, the Management and ProductPlanning team spents an estimated cost at $52,000 to produce anddeploy products across all user interfaces. Also, the SoftwareEngineering team maintains all systems and infrastructure to ensurethat members can continue to sign up and watch ANZflix. Thismaintainance costs ANZflix $56,000 per month. ANZflix uses a serverin Taiwan to deliver streaming videos to its subscribers and thefacility runs at a cost of $135 per month. Another cost incurred byANZflix includes $0.02 per GB (GigaByte) of bandwidth to delivercontent. In addition, the external studios making the content arepaid $0.15 every time for a subscriber watches one program. Atypical ANZflix subscriber will watch 30 programs, streaming 65GBof film and TV shows per month. Each subscriber will also costANZflix $1.14 per month to maintain their membership. (a) Using theabove information, calculate: (i) The break-even number ofsubscribers per month for ANZflix. (ii) The monthly revenue atbreak-even. Show all working out including the modelling andsolution steps. (b) Provide an EXCEL graph detailing the necessaryinformation to show the break-even points contained in yourresponses to parts (a) of this question. The graph must illustratethe B.E.P. and the region corresponding to profits and the regioncorresponding to losses. Your student ID must be included as a partof the title of the graph. (c) How many subscribers are required toobtain a profit of $120,000 per month? What is the monthly revenuefor this number of subscribers? Show all working out including themodelling and solution steps. (d) The marketing department isforecasting that if the subscription price is reduced by 10%,Anzflix will attract 35% more subscribers than the current numberwhen monthly profit is $100,000. However, as they don’t have adegree in analysing data they need you to make sure they aren’tmaking bad recommendations. Calculate the new break-even number ofsubscribers, the new revenue and thus the new profit for thesechanges. Show all working out including the modelling and solutionsteps. (e) What effect does the change in part (d) have on thecontribution margin? Explain the effect of this change on theexpected break-even number in part (a). Support your justificationwith calculation of both contribution margins.
