3. Eastman Publishing Company is considering publishing an electrom spreadsheet

Question

3. Eastman Publishing Company is considering publishing an electrom spreadsheet applications for busine book design, and web site construction is estimated to be S160,000. Variable process- ing costs are estimated to be S6 per book. The publisher plans to sell single-user access ss. The fixed cost of manuseript preparation, text- to the book for $46. a. Build a spreadsheet model to calculate the profi/loss for a given demand. What b. Use a data table to vary demand from 1,000 to 6,000 in increments of 200 to assess c. Use Goal Seek to determine the access price per copy that the publisher must charge d. Consider the following scenarios: profit can be anticipated with a demand of 3,500 copies? the sensitivity of profit to demand. to break even with a demand of 3,500 copies Scenario 3 $12 Scenario 5 $11 Scenario 1 Scenario 2 Scenario 4 Variable Cost $6 S8 $10 Book Access Price Demand $50 1,000 $50 6,0005,000 $60 2,000 $40 $46 2,500 For each of these scenarios, the fixed cost remains $160,000. Use Scenario Manager to generate a summary report that gives the profit for each of these scenarios. Which sce- nario yields the highest profit? Which scenario yields the lowest profit? Rucinass Analvt

Explanation / Answer

answer:

solution "cand A"

please note that break even occurs whenprofoit=loss  

therefore we shall calculate the total cost andthe total sales and then use goal seek to set the profit to zer by changing the access price

it can be seen after running the goal seek,the accesss price cvomes outto be 51.7 and both

the total sales and total cost areequal.

fixed cost variable cost total variable cost total cost 160000 6 21000 181000 SP 46 3 Demand 3500 profit -20000 Total sale 1610000 Break e.PENS W3HEN SALE AND COST BECOMES EQUAL.

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