ENGINEERING ECO ANALYSIS W/STUDY GUIDE
ENGINEERING ECO ANALYSIS W/STUDY GUIDE
13th Edition
ISBN: 9780190693053
Author: NEWNAN
Publisher: Oxford University Press
Question
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Chapter D, Problem 15P
To determine

The total cost to all parties (publisher, book-store, students) over the life of the 160-unit lot of textbooks.

Expert Solution & Answer
Check Mark

Answer to Problem 15P

The correct option is (d)$36,900.

Explanation of Solution

Given:

Total book lot is 160.

Number of semester is 4.

Textbook cost for producer is $25 per book.

Bookstore is paying $50 per book.

Students are paying $75 per new book.

Students are paying $60 per used book.

At the end of each semester, the book store repurchases 50% of book for $30.

Calculation:

Calculate the total cost for the first semester.

Totalcost=(( Numberofbooks×Costforproducer)+( Numberofbooks×Costforbookstore)+( Numberofbooks×Costforstudent)) ...... (I)

Substitute 160 for Numberofbooks, 25 for Cost for producer, 50 for Cost for bookstore, 75 for Cost for student in Equation (I).

Totalcost=(160×25)+(160×50)+(160×75)=4,000+8,000+12,000=24,000

Thus, the total cost for first semester is $24,000.

Calculate the total cost for second semester.

In this semester, the bookstore repurchase 50% of books which was sold in the first semester.

Totalcost=(( Numberofbooksoldinfirstsemester ×0.5×Costtobookstore forrepurchase )+( Numberofbooksoldinfirstsemester ×0.5×Costtostudentforusedbook )) ...... (II)

Substitute 160 for Number of book sold in first semester, 30 for Cost to bookstore for repurchase, 60 for Cost to student for used book in Equation (II).

Totalcost=(160×0.5×30)+(160×0.5×60)=2,400+4,800=7,200

Thus, the total cost for the second semester is $7,200.

Calculate the total cost for the third semester.

In this semester, the bookstore repurchase 50% book which was sold in the second semester.

Totalcost=(( Numberofbooksoldinfirstsemester ×0.5×0.5×Costtobookstoreforrepurchare )+( Numberofbooksoldinfirstsemester ×0.5×0.5×Costtostudentforusedbook )) ...... (III)

Substitute 160 for Number of book sold in first semester, 30 for Cost to bookstore for repurchase, 60 for Cost to student for used book in Equation (III).

Totalcost=(160×0.5×0.5×30)+(160×0.5×0.5×60)=1,200+2,400=3,600

Thus, the total cost for the third semester is $3,600.

Calculate the total cost for the fourth semester.

In this semester, the bookstore repurchase 50% book which was sold in the third semester.

Totalcost=(( Numberofbooksoldinfirstsemester ×0.5×0.5×0.5×Costtobookstoreforrepurchase )+( Numberofbooksoldinfirstsemester ×0.5×0.5×0.5×Costtostudentforusedbook )) ...... (IV)

Substitute 160 for Number of book sold in first semester, 30 for Cost to bookstore for repurchase, 60 for Cost to student for used book in Equation (IV).

Totalcost=(160×0.5×0.5×0.5×30)+(160×0.5×0.5×0.5×60)=600+1,200=1,800

Thus, the total cost for the fourth semester is $1800.

Calculate the total cost at the end of the fourth semester.

At the end of the fourth semester, the bookstore repurchase 50% book which was sold in fourth semester but are not sold back to the students.

Totalcost=(Numberofbookssoldinfirstsemester×0.5×0.5×0.5×0.5×Costtobookstoreforrepurchase) ...... (V)

Substitute 160 for Number of books sold in first semester, 30 for Cost to bookstore for repurchase in Equation (V).

Totalcost=(160×0.5×0.5×0.5×0.5×30)=300

Thus, total cost for end of the fourth semester is $300.

Now, calculate the total cost.

Totalcost=(Totalcostforfirstsemester+Totalcostforsecondsemester+Totalcostforthirdsemester+Totalcostforthefourthsemester+Totalcostfortheendofthesemester) ...... (VI)

Substitute 24,000 for Total cost for the first semester, 7,200 for Total cost for the second semester, 3,600 for the Total cost for the third semester, 1,800 for Total cost for the fourth semester and 300 for Total cost for the end of the fourth semester in Equation (VI).

Totalcost=24,000+7,200+3,600+1,800+300=36,900

Thus, total cost is $36,900.

Conclusion:

Thus, the correct option is (d)$36,900.

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Chapter D Solutions

ENGINEERING ECO ANALYSIS W/STUDY GUIDE

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