The Goldberg-Scheinman Publishing Company is publishing a new managerial economics text for which it has estimated the
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 commission..................................................................................................................... 1
Bookstore discounts................................................................................................................ 7
Author's royalties..................................................................................................................... 4
Average variable costs......................................................................................................... $20
Project selling price.............................................................................................................. $30
(a). Determine the break even output and total sales revenues.
(b). Determine the output that would generate a total profit of $60,000 and the total sales revenues at that output level.
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates