Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, taxtbook design, and web site construction is estimated to be $169,000, Variable processing costs are estimated to be $9 per book. The publisher plans to sell single-user access to the book for $42. Theresies of web-based experiments, Eastman has created a predictive model that estimates demand as a function of price. The predictive model is demand -4,000-6p, where pis of e-book. (a) Construct an appropriate spreadsheet model for calculating the profit/loss at a given single-user access price taking into account the above demand function. What is the profit estimated by your model for the given costs and single user access price (in dollars). S (b) Use Goal Seek to calculate the price (in dollars) that results in breakeven. (Round your answer to the nearest cent.) (c) Use a data table that varies price from $50 to $400 in increments of $25 to find the price (in dollars) that maximizes profit.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web
site construction is estimated to be $169,000. Variable processing costs are estimated to be $9 per book. The publisher plans to sell single-user access to the book for $42.
Through a series of web-based experiments, Eastman has created a predictive model that estimates demand as a function of price. The predictive model is demand -4,000-6p, where p is
the price of the e-book.
(a) Construct an appropriate spreadsheet model for calculating the profit/loss at a given single-user access price taking into account the above demand function. What is the profit
estimated by your model for the given costs and single user access price (in dollars).
s
(b) Use Goal Seek to calculate the price (in dollars) that results in breakeven. (Round your answer to the nearest cent.)
(c) Use a data table that varies price from $50 to $400 in increments of $25 to find the price (in dollars) that maximizes profit.
$
Transcribed Image Text:Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web site construction is estimated to be $169,000. Variable processing costs are estimated to be $9 per book. The publisher plans to sell single-user access to the book for $42. Through a series of web-based experiments, Eastman has created a predictive model that estimates demand as a function of price. The predictive model is demand -4,000-6p, where p is the price of the e-book. (a) Construct an appropriate spreadsheet model for calculating the profit/loss at a given single-user access price taking into account the above demand function. What is the profit estimated by your model for the given costs and single user access price (in dollars). s (b) Use Goal Seek to calculate the price (in dollars) that results in breakeven. (Round your answer to the nearest cent.) (c) Use a data table that varies price from $50 to $400 in increments of $25 to find the price (in dollars) that maximizes profit. $
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