Accoutning Assignment : Tie your answer to the eBook and reference an external academic source.
Response post (at least two; 100 words only, due (30%)
Summary post (100 words only , (10%)
In your response post, comment on how your analysis agrees with or differs from your classmate’s analysis. Share any additional resources that could help with this analysis.
Discussion 2.1 PBS Station Analysis A local PBS station has decided to produce a TV series on state-of-the-art manufacturing. The director of the TV series, Justin Tyme, is currently attempting to analyze some of the projected costs for the series.
Tyme intends to take a TV production crew on location to shoot various manufacturing scenes as they occur.
If the four-week series is shown in the 8:00-9:00 P.M. prime-time slot, the station will have to cancel a wildlife show that is currently scheduled.
Management projects a 10% viewing audience for the wildlife show, and each 1% is expected to bring in donations of $10,000.
In contrast, the manufacturing show is expected to be watched by 15% of the viewing audience. However, each 1% of the viewership will likely generate only $5,000 in donations.
If the wildlife show is canceled, it can be sold to network television for $25,000.
Using the cost terminology introduced in this chapter, comment on each of the financial amounts mentioned in this scenario.
What are the relative merits of the two shows regarding the projected revenue to the station?
Based on your learning, what decision would you make and why?
Tie your answer to the eBook and also reference an external academic source.
Response post (at least two; 100 words each, due (30%)
Summary post (100 words , (10%)
In your response post, comment on how your analysis agrees with or differs from your classmate’s analysis. Share any additional resources that could help with this analysis.
Krystal Johns posted Oct 24, 2024 9:06 AM
There are a number of financial terms from cost management that can be applied to the amounts mentioned in this analysis of a PBS station. An opportunity cost is defined as the benefit that is sacrificed when the choice of one action precludes taking an alternative course of action (Hilton & Platt, 2022). If the wildlife show is cancelled the station forgoes donations from its viewership. The wildlife show is expected to bring in $10,000 per 1% viewership, with a 10% expected viewing audience meaning the station is going to be giving up $100,00 in potential donations. Also, the wildlife show can be sold to a network for $25,000 so this is another opportunity cost if the manufacturing show is aired instead of selling the wildlife show. Relevant cost is a managerial accounting term that describes avoidable costs that are incurred only when making specific business decisions (Tuovila, 2024). The concept of relevant cost is used to eliminate unnecessary data that could complicate the decision-making process (Tuovila, 2024). The revenue from the manufacturing show is a relevant consideration. The manufacturing show is expected to generate $5000 per 1% of the viewing audience and it projected to attract 15% audience viewership. Therefore, the donations expected by the manufacturing show will amount to $75,000 (15% x $5,000).
To assess the relative merits of the two shows regarding their projected revenue to the station we have to compare the wildlife show and the manufacturing show based on projected viewership donation and the potential sale of the wildlife show. In comparison to the manufacturing show, the wildlife show offers $125,000 in combined donations and potential sale revenue, while the manufacturing show only generates $75,000 in revenue.
On the basis of projected revenues and other factors, I recommend keeping the wildlife show. As shown by the higher donations per percentage of audience, the wildlife show provides the station with higher immediate financial benefits. The manufacturing show can still air at a later date, however the wildlife show would be a better fit for the prime-time slot at the moment, given the numbers.
References
Hilton, R.W. & Platt, D. (2022). Managerial accounting: Creating value in a dynamic business environment. (12th ed.). New York, NY: McGraw-Hill Education.
Tuovila, A. (2024, August 22). What is Relevant Cost in Accounting, and Why Does it Matter? Investopedia. https://investopedia.com/terms/r/relevantcost.asp
Tatianna Khadoo
Financial Amounts Analysis
Wildlife Show:
Viewing Audience: 10%
Revenue per 1% Viewership: $10,000
-Total Donations from Viewership:
10% times 10,000 = 100,000
Sale to Network Television:$25,000
Total Revenue from Wildlife Show:
100,000 + 25,000 = 125,000
Manufacturing Show: Viewing Audience: 15%
Revenue per 1% Viewership: $5,000
Total Donations from Viewership:
15% times 5,000 = 75,000
Total Revenue from Manufacturing Show: 75,000
Relative Merits of Each Show
Based on the calculations, the projected total revenues are as follows:
Wildlife Show: $125,000
Manufacturing Show: $75,000
The wildlife show not only generates higher donations from viewership but also includes guaranteed revenue from the sale to network television. In contrast, the manufacturing show has lower revenue potential and does not provide an additional income stream.
Decision Recommendation
Given the projected revenues, I recommend continuing with the wildlife show. The financial analysis indicates that it produces more income from both viewer donations and the television rights sale. While the manufacturing show might appeal to a different audience or offer educational value, the financial stability provided by the wildlife show is a more compelling factor in this context.
Supporting Literature
This recommendation aligns with principles of cost-benefit analysis, where various revenue streams are assessed against one another. According to Horngren et al. (2013), it is crucial to understand both direct and indirect financial impacts when making decisions. The wildlife show’s combination of direct revenue from donations and indirect revenue from sales presents a strong financial case for its continuation over the manufacturing show.
In conclusion, prioritizing financial stability alongside viewer engagement and program content is essential. Therefore, based on the projected revenue and analysis, airing the wildlife show emerges as the most financially prudent decision.
Reference: Horngren, C. T., Sundem, G. L., & Stratton, W. O. (2013). Introduction to Management Accounting. Pearson.