TV Listing case study
TV Listings Magazines, Inc.
1. Increased Circulation in Culver City, Florida
Change in Output 20,000
Copies
Change in Cost
Marginal Cost per copy
Paper Cost $2,240 $0.11
Binding
$380 $0.02
Delivery
$260 $0.01
Total Cost $2,880 $0.14
The cost to TV Listings for an additional 20,000 issue is $2,880. Based on our analysis, the variable cost that is affected on the additional issues are paper, binding and delivery cost. The only variable cost that is not affected in the addition is the plate production because whether or not they need any additional issue, plates will still have to produce black and white and colored pages. The remainder of the costs in editorial, administration, composing computer and national program data base are fixed because no matter how much output they produce, the cost will not change. The lowest price per extra copy TV Listings can offer without reducing profit is 0.14 cents. We were able to determine this by finding the marginal cost per copy.
2. Increased Channel Offerings in Des Moines, Utah
Output
84,000
Copies
Change in Output 12
National Channels
Change in Output 8
Program book sheets
Change in Cost
Marginal Cost per copy
Plates
$3,456 $.04
Paper Cost (Program Book) $2,688 $0.03
Binding
$- $-
Delivery
$- $-
Total Cost $6,144 0.07
TV Listings have to increase its original price by .07 cents in order to maintain its former profit level. The variable cost that were affected in their new 3-year contract are channel and paper cost because the only changes were the increase of pages in the program book, two local and sixteen national channels. Since the copies of 84,000 remain the same from the previous contract, binding and delivery cost would not change.
3. A New Guide for Cheyenne, Connecticut
Output
48,000
Change in Output 48,000
Change in Output 4
Local Channels
Change in Output
1. Increased Circulation in Culver City, Florida
Change in Output 20,000
Copies
Change in Cost
Marginal Cost per copy
Paper Cost $2,240 $0.11
Binding
$380 $0.02
Delivery
$260 $0.01
Total Cost $2,880 $0.14
The cost to TV Listings for an additional 20,000 issue is $2,880. Based on our analysis, the variable cost that is affected on the additional issues are paper, binding and delivery cost. The only variable cost that is not affected in the addition is the plate production because whether or not they need any additional issue, plates will still have to produce black and white and colored pages. The remainder of the costs in editorial, administration, composing computer and national program data base are fixed because no matter how much output they produce, the cost will not change. The lowest price per extra copy TV Listings can offer without reducing profit is 0.14 cents. We were able to determine this by finding the marginal cost per copy.
2. Increased Channel Offerings in Des Moines, Utah
Output
84,000
Copies
Change in Output 12
National Channels
Change in Output 8
Program book sheets
Change in Cost
Marginal Cost per copy
Plates
$3,456 $.04
Paper Cost (Program Book) $2,688 $0.03
Binding
$- $-
Delivery
$- $-
Total Cost $6,144 0.07
TV Listings have to increase its original price by .07 cents in order to maintain its former profit level. The variable cost that were affected in their new 3-year contract are channel and paper cost because the only changes were the increase of pages in the program book, two local and sixteen national channels. Since the copies of 84,000 remain the same from the previous contract, binding and delivery cost would not change.
3. A New Guide for Cheyenne, Connecticut
Output
48,000
Change in Output 48,000
Change in Output 4
Local Channels
Change in Output