12. Correct Answer: D. Working note: Total variable cost = .57 + 2.0+ 5.55 + .98
ID: 373982 • Letter: 1
Question
12.
Correct Answer:
D.
Working note:
Total variable cost = .57 + 2.0+ 5.55 + .98 = $9.1
13.
Correct Answer:
C
Working note:
Elasticity = ((150000-185000)/(150000+185000)/2)/((25-20)/(25+20)/2)
Elasticity = -.94
14.
Correct Answer:
C
Working note:
Let, unit revenue = x
Then,
X + .4X + .1X = 24.99
X = 24.99/(1+.4+.1)
X = $16.66
15.
Correct Answer:
15114 units
Working note:
Fixed cost = 54260 + 60000 = $114260
Unit revenue = $16.66
Unit variable cost = 9.1
Breakeven volume = 114260/(16.66-9.1) = 15114 units approx.
12.
Correct Answer:
D.
Working note:
Total variable cost = .57 + 2.0+ 5.55 + .98 = $9.1
13.
Correct Answer:
C
Working note:
Elasticity = ((150000-185000)/(150000+185000)/2)/((25-20)/(25+20)/2)
Elasticity = -.94
14.
Correct Answer:
C
Working note:
Let, unit revenue = x
Then,
X + .4X + .1X = 24.99
X = 24.99/(1+.4+.1)
X = $16.66
15.
Correct Answer:
15114 units
Working note:
Fixed cost = 54260 + 60000 = $114260
Unit revenue = $16.66
Unit variable cost = 9.1
Breakeven volume = 114260/(16.66-9.1) = 15114 units approx.
Explanation / Answer
Scenario #1: Ciaos Publishing o Claos Publishing, Inc, is publishing a book entitled Urban Sunset in America by top authors Conman Best. The cost and price information is as follows Book Jacket/Cover Author's royaities Direct Material and Labor Distribution $0.57 per book $2.00 per book $5.55 per book $0.98 per book Demand Schedaie Price Demand $17 310,000 $20 185,000 $25 150,000 $30 72,000 $35 32,000 In addition, Ciaos Publishing paid one time expenses of $54,260 for advertising, editing, plus miscellaneous expenses; and a $60,000 advance to Conman Best. Refer toScenario #1 (Ciaos Publishing). What are the total variable costs? a. $2.00 12. $6.12 $8.12 b. c. d. $9.10 e $114,260 Refer to Scenario #1 (Caos Publishing). What is the elasticity between $20 and $25? a. 0.000143 b. 0.0143 c. 0.940 d. 7,000 e. none of the above 13. Refer to Scenario #1 (Caos Publishing). With a suggested retail price of $24.99 and given that the bookstore has 40% mark-up on price, and the distributors have a 10% markup on the price to the bookstore (a functional discount of 40/10), how much does the publisher receive per book (unit revenue)? a. $12.50 b. $13.49 c. $16.66 d. $19.22 e. $23.99 14. 15. Refer to Scenario #1 (Caos Publishing). Using unit revenue of the publisher at the suggested retail price of $24.99, what is the publisher's break-even volume for Urban Sunset in America? a. 150,000 b 46,000 c. 26,000 d 4,600 e. Page 3 of 6
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