The Goldberg-Scheinman Publishing Company is publishing a new managerial economi
ID: 1095773 • Letter: T
Question
The Goldberg-Scheinman Publishing Company is publishing a new managerial economics text for which it has estimated the following total fixed and average variable costs:
Total fixed costs:
Copy editing $10,000
Typesetting 70,000
Selling and Promotion 20,000
Total fixed costs $100,000
Average variable costs:
Printing and binding $6
Administrative costs 2
Sales commission 1
Bookstore discounts 7
Author's royalties 4
Average variable costs $20
Project selling price $30
(a) Determine the breakeven output and total sales revenues.
(b) Determine the output that would generate a total profit of $60,000 and the total sales revenues at that output level.
Explanation / Answer
a. the break even point is when the average total cost is minimized,or economic profit=0,then
30-20=100,000/q
q=100,000/10=10,000
b. (30-20)q=100,000-60,000.
q=40,000/10=4,000.Total sale is 4,000 x 30=$120,000
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