 Business
27 August, 09:26

# Problem 10-3 eastman publishing company is considering publishing an electronic textbook about spreadsheet applications for business. the fixed cost of manuscript preparation, textbook design, and web-site construction is estimated to be \$160,000. variable processing costs are estimated to be \$6 per book. the publisher plans to sell single-user access to the book for \$46. (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.

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1. 27 August, 11:09
0

Fixed cost = \$160,000

Variable cost = \$6 per book

Selling price = \$46 per book

First, we have to establish an equation to know the profit or loss of the company.

Total cost = Fixed cost + Variable Cost (number of books)

Total sales = Selling price (number of books)

The profit is calculated by subtracting the total cost from the total sales.

Profit = Total sales - total cost

The following equations are useful:

let x = number of books produced

y = number of books sold

Total cost = \$160,000 + \$6x

Total sales = \$46y

The value of x can be changed according to the actual number of books produced. y can be changed according to the actual number of books sold

Profit = \$46y - (\$160,000 + \$6x)

If x = y = 3500

Profit = \$22,000 for 3500 books