14. Eastman Publishing Company is considering publishing a paperback textbook on spread-sheet applications for business. The fixed cost of manuscript preparation, textbook design,and production setup is estimated to be $80,000. Variable production and material costsare estimated to be $3 per book. Demand over the life of the book is estimated to be4000 copies. The publisher plans to sell the text to college and university bookstores for$20 each.a. What is the breakeven point?b. What profit or loss can be anticipated with a demand of 4000 copies?c. With a demand of 4000 copies, what is the minimum price per copy that the publishermust charge to break even?d. If the publisher believes that the price per copy could be increased to $25.95 and notaffect the anticipated demand of 4000 copies, what action would you recommend?What profit or loss can be anticipated?

“Since you have posted a question with many sub-parts, we will solve three sub-parts for you. To get…

a. What is the breakeven point? b. What profit or loss can be anticipated with a demand of 4000 copies? With a demand of 4000 copies, what is the minimum price per copy that the publisher must charge to break even? c.

a. What is the breakeven point? b. What profit or loss can be anticipated with a demand of 4000 copies? With a demand of 4000 copies, what is the minimum price per copy that the publisher must charge to break even? c.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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14. Eastman Publishing Company is considering publishing a paperback textbook on spread-
sheet applications for business. The fixed cost of manuscript preparation, textbook design,
and production setup is estimated to be $80,000. Variable production and material costs
are estimated to be $3 per book. Demand over the life of the book is estimated to be
4000 copies. The publisher plans to sell the text to college and university bookstores for
$20 each.
a. What is the breakeven point?
b. What profit or loss can be anticipated with a demand of 4000 copies?
c. With a demand of 4000 copies, what is the minimum price per copy that the publisher
must charge to break even?
d. If the publisher believes that the price per copy could be increased to $25.95 and not
affect the anticipated demand of 4000 copies, what action would you recommend?
What profit or loss can be anticipated?

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