my question is higlighted in green. 1 Exhibit 1 2 Text Base Cost Composition Sto

Question

my question is higlighted in green.

1 Exhibit 1 2 Text Base Cost Composition Stock Press Ink Art Cuts Misc Overhead (15% of above, excluding base cost) Total Text Costs 200.00 1305.90 774 50 740.40 22.34 40.00 64 66 36.50 447 65 3631.95 Assume that each quantity was pre- planned prior to printing. Note that the composition costs are fixed for a single run and there is a base cost for the printer. All remaining costs, including freight, are proportional to volume. Make any other assumptions or calculations that seem appropriate 10 12 13 14 Jactet Glossy 15 17 18 19 20 21 Composition Stock Press Ink Art Cuts Overhead (15% of above) 13.00 28.50 58.30 7.26 11094 39.00 38.55 Okay. I am assuming that COMPOSITION and BASE costs are fixed. Am I correct ? 23 24 i 25 26 27 Total Jacket Covers (1,000 copies) Binding (1,000 copies) Freight Total Cost 295.55 524.00 100.00 4551.50 Sheet

Explanation / Answer

Your assumption regarding base cost is correct i.e. it is a fixed cost and only incur once. But composition cost is semi fixed cost that means for every single run of 1,000 copies a cost of $1305.90 will be incurred. For instance if total copies would be 1500 then the composition cost will be incurred double means for 2 runs. After completing 1 run even if 1 book is produced more, then the composition cost will be incurred in full again.

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