Eastman Publishing Company is considering publishing an electronic textbook on s

Question

Eastman Publishing Company is considering publishing an electronic textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and website construction is estimated to be $155,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell access to the book for $47 each.

(a)

Build a spreadsheet model in Excel to calculate the profit/loss for a given demand. What profit can be anticipated with a demand of 3,200 copies?

For subtractive or negative numbers use a minus sign.

$ _________________

(b)

Use Goal Seek to answer the following question. With a demand of 3,200 copies, what is the access price per copy that the publisher must charge to break even?

If required, round your answers to two decimal places.

$ _________________

(a)

Build a spreadsheet model in Excel to calculate the profit/loss for a given demand. What profit can be anticipated with a demand of 3,200 copies?

For subtractive or negative numbers use a minus sign.

$ _________________

(b)

Use Goal Seek to answer the following question. With a demand of 3,200 copies, what is the access price per copy that the publisher must charge to break even?

If required, round your answers to two decimal places.

$ _________________

Explanation / Answer

Selling price 47 Less: Variable Cost 6 Contribution per unit 41 Units 3200 Total Contribution 131200 3200*41 Less: Fixed Costs 155000 Loss -23800 2 Break Even = Fixed Cost/ Contribution per unit 3200= 155000/x-6 x-6= 155000/3200 x-6= 48.4375 X = 48.43+6 X = 54.43 The selling price should be $ 54.43 per copy to break even

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