Eastbay 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 in Excel to calculate the profit/loss for a given demand. What profit can be anticipated with a demand of 3,500 copies?

Solution and Explanation:

Profit at 3,500 copies

Sales = $ 46 multiply 3,500                            161,000

Less: Variable cost = $ 6 multiply  3500      21,000

Contribution                                                      140,000

Less: Fixed Cost                                              160,000

Net Income                                                      (20,000)

Demand  Sales = $ 46 per unit  Variable cost = $ 6 per unit  Contribution  Fixed cost = $ 160,000  Net Profit

 1,000   46,000              6,000      40,000     160,000         (120,000)

 1,200    55,200               7,200     48,000      160,000         (112,000)

  1,400     64,400        8,400     56,000       160,000         (104,000)

  1,600      73,600        9,600      64,000       160,000           (96,000)

  1,800       82,800         10,800    72,000    160,000           (88,000)

  2,000      92,000         12,000   80,000        160,000           (80,000)

   2,200       101,200          13,200      88,000  160,000           (72,000)

  2,400        110,400           14,400      96,000  160,000           (64,000)

  2,600         119,600          15,600       104,000  160,000           (56,000)

2,800          128,800           16,800       112,000      160,000           (48,000)

3,000           138,000     18,000        120,000  160,000           (40,000)

3,200           147,200           19,200         128,000  160,000           (32,000)

3,400         156,400            20,400        136,000  160,000           (24,000)

3,600         165,600         21,600     144,000       160,000           (16,000)

3,800        174,800          22,800    152,000     160,000           (8,000)  4,000         184,000           24,000       160,000    160,000            -  

4,200        193,200            25,200      168,000    160,000           8,000

 4,400         202,400           26,400     176,000  160,000              16,000

 4,600          211,600            27,600      184,000      160,000            24,000

4,800          220,800    28,800       192,000   160,000   32,000

5,000         230,000            30,000       200,000    160,000    40,000

  5,200          239,200     31,200        208,000    160,000          48,000

 5,400            248,400      32,400      216,000    160,00            56,000

5,600         257,600           33,600        224,000    160,000          64,000

5,800         266,800            34,800         232,000    160,000    72,000

 6,000          276,000    36,000         240,000     160,000        80,000

a

explanation:

reducti0n

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i have economics during second block which is easy to me. anyways, i think b.