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 $160,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell access to the book for $46 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 3,500 copies? For subtractive or negative numbers use a minus sign

Explanation / Answer

Solution:-

     

The following model can be easily build in EXCEL:

For a demand of 3,500 copies, the company would incurr a loss of -$20,000

Amount Sales (3,500*46) 161,000 Less Variable Cost (3,500*6) 21,000 Contribution 140,000 Less Fixed Cost 160,000 Net Profit/Loss -$20,000

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