Eastman Publishing Company is considering publishing an electronic textbook abou

Question

Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web-site construction is estimated to be $160,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell single-user access to the book for $46.

Build a spreadsheet model to calculate the profit/loss for a given demand. What profit can be anticipated with a demand of 3500 copies?

Use a data table to vary demand from 1000 to 6000 in increments of 200 to assess the sensitivity of profit to demand.

Use Goal Seek to determine the access price per copy that the publisher must charge to break even with a demand of 3500 copies.

Explanation / Answer

a)

b)

c)

BEP=181000/3500=51.7142857

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