The Gotham City News is moving to a paywall subscription service rather than a free news website with unlimited access. If subscribers would like to access more than ten articles per month, they will need to pay a monthly subscription fee of $22. However, if they are also weekly subscribers of the print edition of the newspaper, they receive a 60% discount on the on-line subscription rate. The monthly rate for the print edition of the newspaper is $27. Based on market research, the Times believes that 21% of the households that order the print edition will also order the website subscription. While there are basically no variable costs to the website version, the print edition does cost $22 per month to print and deliver to households. Required:
If marketing research indicates that an average print only subscriber will only continue their subscription for 24 months if they don't also purchase the digital edition, what is the 3 year CLV of a current print edition customer taking into consideration those that will choose print only (24 month) and those that choose to add the digital edition (who then drop the print after 16 months)?

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Newton industries is considering a project and has developed the following estimates: unit sales = 4,800, price per unit = $67, variable cost per unit = $42, annual fixed costs = $11,900. the depreciation is $14,700 a year and the tax rate is 34 percent. what effect would an increase of $1 in the selling price have on the operating cash flow?

Zachary company produces commercial gardening equipment. since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. the costs and cost drivers associated with the four overhead activity cost pools follow: activities unit level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?