Question :

Eastman Publishing Company is supposing publishing a paperback textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, production setup and textbook design is estimated to be $80,000. Variable production and material costs are evaluated to be $3 per book. Demand over the life of the book is estimated to be 4,000 copies. The publisher plans to sell the text to university and college bookstores for $20 each.

a. Determine the break-even point?

b. What profit or loss will be anticipated with a demand of 4,000 copies?

c. With a demand of 4,000 copies, evaluate the minimum price per copy that the publisher must charge to break-even?

d. If the publisher starts that the price per copy would be increased to $29.95 and not affect the anticipated demand of 4,000 copies, what action could you recommend? What profit or loss can be anticipated?