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
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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?
Transcribed Image Text: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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