Hershey Co. is considering publishing a paperback textbook on spreadsheet

applications for business. The fixed cost of manuscript preparation, textbook design, and production

set-up is estimated to be $80,000. Variable production and material costs are estimated to be $3 per

book. Demand over the life of the book is estimated to be 4000 copies. The publisher plans to sell the

text to college and university bookstores at $20 each.

QUESTION:

1. If the publisher believes that the price per copy could be increased to $25.95 and not affect the

anticipated demand of 4000 copies, what action would you recommend? What profit or loss

could be anticipated?