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 $155,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell single-user access to the book for $47. (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 3,200 copies? For subtractive or negative numbers use a minus sign. -23800 (b) Use a data table to vary demand from 1,000 to 6,000 in increments af 200 to test the sensitivity of profit to demand. Breakeven occurs where profit goes from a negative to a positive value, that is, breakeven is where total revenue - total cost yielding a profit of zero. In which interval of demand does breakeven occur? (1) Breakeven appears in the interval of 3,200 to 3,400 copies. (1) Breakeven appears in the interval of 3,600 to 3,800 copies. () Breakeven appears in the interval of 3,800 to 4,000 copies. (iv) Breakeven appears in the interval of 4,000 to 4,200 copies. Option () (c) Use Goal Seek to determine the access price per copy that the publisher must charge to break even with a demand of 3,200 copies. If required, round your answer to two decimal places.
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 $155,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell single-user access to the book for $47. (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 3,200 copies? For subtractive or negative numbers use a minus sign. -23800 (b) Use a data table to vary demand from 1,000 to 6,000 in increments af 200 to test the sensitivity of profit to demand. Breakeven occurs where profit goes from a negative to a positive value, that is, breakeven is where total revenue - total cost yielding a profit of zero. In which interval of demand does breakeven occur? (1) Breakeven appears in the interval of 3,200 to 3,400 copies. (1) Breakeven appears in the interval of 3,600 to 3,800 copies. () Breakeven appears in the interval of 3,800 to 4,000 copies. (iv) Breakeven appears in the interval of 4,000 to 4,200 copies. Option () (c) Use Goal Seek to determine the access price per copy that the publisher must charge to break even with a demand of 3,200 copies. If required, round your answer to two decimal places.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 11P: Emerald Island Company is considering building a manufacturing plant in County Kerry. Predicting...
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Transcribed Image Text:Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cast of
manuscript preparation, textbook design, and web-site construction is estimated to be $155,000. Variable processing costs are estimated to
be $6 per book. The publisher plans to sell single-user access to the book for $47.
(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
3,200 copies? For subtractive or negative numbers use a minus sign.
-23800
(b) Use a data table to vary demand from 1,000 to 6,000 in increments of 200 to test the sensitivity of profit to demand. Breakeven occurs
where profit goes from a negative to a positive value, that is, breakeven is where total revenue - total cost yielding a profit of zero. In
which interval of demand does breakeven occur?
(1) Breakeven appears in the interval of 3,200 to 3,400 copies.
(1) Breakeven appears in the interval of 3,600 to 3,800 copies.
(i) Breakeven appears in the interval of 3,BO0 to 4,000 coples.
(iv) Breakeven appears in the interval of 4,000 to 4,200 copies.
Option ()
(c) Use Goal Seek to determine the access price per copy that the publisher must charge to break even with a demand of 3,200 copies. If
required, round your answer to two decimal places.
(d) Consider the following scenarios:
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Scenario 5
Variable
$6
$10
$12
$13
$11
Cost/Book
Access Price
$47
$42
$48
$50
$62
Demand
2,000
3,700
6,000
4,500
2,800
For each of these scenarios, the fixed cost remains $155,000. Use Scenario Manager to generate a summary report that gives the profit
for each of these scenarios. Which scenario ylelds the highest profit? Which scenario yields the lowest profit? For subtractive or negative
numbers use a minus sign.
- Select your answer-
yields the highest profit of $
Select your answer Vyields the lowest profit of
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