Ask Question
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.

+2
Answers (1)
  1. 27 August, 11:09
    0
    We are given the following data for publishing an electronic textbook about spreadsheet applications for business.

    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
Know the Answer?