Eastman Publishing Company is considering publishing a paperback textbook on spreadsheet application for business. The fixed cost of manuscript preparation, textbook design, and production setup is estimated to be $80,000. Variable production and material cost 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 bookstore for $20 each. Required: 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 breakeven? d) If the publisher believes that the price per copy could be increased to $25.95and not affect the anticipated demand of 4000 copies, what action would you recommend? What profit or loss can be anticipated?
Eastman Publishing Company is considering publishing a paperback textbook on spreadsheet application for business. The fixed cost of manuscript preparation, textbook design, and production setup is estimated to be $80,000. Variable production and material cost 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 bookstore for $20 each. Required: 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 breakeven? d) If the publisher believes that the price per copy could be increased to $25.95and not affect the anticipated demand of 4000 copies, what action would you recommend? What profit or loss can be anticipated?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Eastman Publishing Company is considering publishing a paperback textbook on spreadsheet application for business. The fixed cost of manuscript preparation, textbook design, and production setup is estimated to be $80,000. Variable production and material cost 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 bookstore for $20 each.
Required:
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 breakeven?
- d) If the publisher believes that the price per copy could be increased to $25.95and not affect the anticipated demand of 4000 copies, what action would you recommend? What profit or loss can be anticipated?
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