2. A magazine printer is considering taking on a new weekly publication. The company's financial officer has researched and...

 

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2. A magazine printer is considering taking on a new weekly publication. The company's financial officer has researched and determined costs and a committee of upper management personnel are deciding whether or not to add the publication to the printer's workload. Financial Data: To print the magazine, a new heatset web press would need to be purchased at a price of $12,000,000. The price includes installation. Additional bindery equipment needed to handle the additional work (inserting/stitching/trimming/ink jet machine) would cost $400,000. Prepress setup costs (file analysis through platemaking) are estimated to cost about $4000.00 per issue with 52 issues to be produced each year. Production costs per magazine would break down to $0.50 for paper, $0.05 for ink, and $0.20 per copy for pressrun, bindery, and shipping. The publisher is willing to pay the printer $0.90 per magazine printed. The Problems: Given the financial data, determine the following: • How many total magazines must be printed to pay off all fixed costs in a single year and to recover at a depreciation rate of 10% per year for press and bindery equipment(payoff equipment over a ten year period), how many issues must the printer produce annually to break even? How many copies of the magazine must be shipped each week? At a production rate of 5000 per hour, how many hours per week must be devoted to the job at this volume? ● Assuming a 10% depreciation rate, how many magazines must we print if we want an 8% ROI on our equipment investment this year? How many magazine units is that per week? At a production rate of 5000 per hour, how many hours per week must be devoted to the job at this volume and If the publisher wants 350,000 magazine units per issue, do you think taking on this publication is a good idea? What is the annual profit/loss? Express this as a percentage of investment dollars. What are a few of the non-financial factors that this printer may need to consider before investing?

Answer rating: 100% (QA)

Requirment 1 Fixed Costs 10 Depreciation on 12 400 000 Pre press setup cost 4000 52 Total Fixed Cost View the full answer