The Goldberg-Scheinman Publishing Company is publishing a new managerial economi
ID: 1186621 • 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 Commissions = $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 and draw the cost-volume-profit chart, and b). determine the output that would generate a total profit of $60,000 and the total sales revenues at the output level; draw the cost-volume-profit chart.
Explanation / Answer
total cost=total fixed cost+total variable cost
x*30= 100000+ x*20
x*(30-20)=100000
x=100000/10
x=10000
breakeven output=10000
total revenue=10000*30=$300000
b)60000= x*30 - (100000 + x*20)
60000= 10x-100000
160000=10x
x=16000
output level=16000
total sales revenues=16000*30=$480000
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