(1) You\'ve been assigned to analyze the profitability of Bill Gates\' autobiogr

Question

(1) You've been assigned to analyze the profitability of Bill Gates' autobiography. The following assumptions have been made: a. b. c. d. e. f. g. Bill is receiving a one-time royalty payment of $12 million. The fixed cost of producing the hardcover version of the book is $1million. The variable cost of producing each hardcover book is $4 The publisher expects to sell 1 million hardcover books The fixed cost of producing the paperback is $100,000 The variable cost of producing each paperback book is $1 Paperback sales will be double hardcover sales. Determine how the publisher's profit varies as hardcover sales vary from 100,000 through 1 million copies. Place the data table in the Q1 sheet

Explanation / Answer

Situation A B C Hardcover 200000 2000000 2000000 paperback 100000 1000000 100000 Sales Hardcover 1500000 15000000 1500000 paperback 800000 8000000 8000000 Variable cost Hardcover 400000 4000000 400000 paperback 200000 2000000 2000000 Fixed cost Hardcover 1000000 1000000 1000000 paperback 100000 100000 100000 Royalty 12000000 12000000 12000000 Profit         (11,400,000)          3,900,000         (6,000,000)

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