my discussion post:
Several financial amounts are used for each of the following, can be classified according to cost classification. That is the $10,000 per 1% viewership donation I mentioned earlier from the wildlife show, which is the station’s revenue now. The option to sell the wildlife show on network television for $25000 is also incremental as it happens only when it is off. This amounts to $5,000 per one per cent of the manufacturing show’s viewership, which is viable revenue for the new series. The difference in the money collected for wildlife and manufacturing shows differential revenue. The wildlife show earns more donations per head ($10000 for 10% of viewers) compared to the manufacturing show, which would earn $5000 for 15% of viewers.
Regarding the projected revenues in the two shows, revenue from donations is expected to be slightly higher for the wildlife show ($100,000) than for the manufacturing show ($75,000). Nevertheless, its potential revenue would increase by selling the wildlife show to the network television for $25000, making the potential revenue of the wildlife show $125000. On the other hand, the manufacturing show’s total revenue forecast still stays at $75,000. The wildlife show is potentially more valuable for the station’s funding because of its exclusive economic results.
Based on the above analysis, I should retain the wildlife show and sell the show to network television. This decision is more profitable for the station and brings $125 000, while the cancellation of the wildlife show and the production of the manufacturing show will get only $75 000.
According to Hilton & Platt (2020), on opportunity cost, the station forgone donation sales should be subtracted from the manufacturing show opportunities. Furthermore, according to Martin (2021), regarding public service broadcasting, profitability should be struck and consistent with programming decisions; this profitability decision supports this.
Reference
Hilton, R. W., & Platt, D. E. (2020). Managerial accounting: creating value in a dynamic business environment. McGraw-Hill.
Martin, E. N. (2021). Can public service broadcasting survive Silicon Valley? Synthesizing leadership perspectives at the BBC, PBS, NPR, CPB and local US stations. Technology in Society, 64, 101451.
Professor Response:
Michael,
Thank you for sharing your perspective. According to Harvard Business School Online, a cost-benefit analysis (CBA) helps analyze whether or not a project is worth the resources. The CBA compares the “estimated costs and benefits associated with a project decision to determine whether it makes sense from a business perspective” (Stobierski, 2019). A CBA not only analyzes direct, indirect, and competitive benefits, but it also accounts for intangible benefits such as employee morale (Stobierski, 2019). Thoughts? What would be another method that one could chose after CBA approach?
Dr. Majors
Stobierski, T. (2019, Sep. 5). How to do a Cost-Benefit Analysis & Why It’s Important. Harvard Business School Online. Retrieved from: https://online.hbs.edu/blog/post/cost-benefit-analysis
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