nstructions:

Read the problem below and refer to the spreadsheet provided. The spreadsheet values highlighted in yellow can be manipulated in order to determine possible outcomes and answer the questions. You must answer the follow-up questions (ae) correctly to receive full credit.

Problem:

Sue Cline, the business manager at Magna University Student Bookstore, is developing plans for the next academic year. The bookstore is one of the universitys nonprofit activities, but any surplus (profit) it earns is used to support the student activities center.

Two popular products at the bookstore are the student academic calendar and notebooks with the school name. Sue Cline thinks that she can sell calendars to 90 percent of Magnas 3,000 students, so she has had 2,700 printed. The total cost, including artwork and printing, is $11,500. Last year the calendar sold for $5.00, but Sue is considering changing the price this year.

Sue thinks that the bookstore will be able to sell 6,000 notebooks if they are priced right. But she knows that many students will buy similar notebooks (without the school name) from stores in town if the bookstore price is too high.

Sue has entered the information about selling price, quantity, and costs for calendars and notebooks in the spreadsheet program so that it is easy to evaluate the effect of different decisions. The spreadsheet is also set up to calculate revenue and profit, based on:

Revenue = (Selling price) (Quantity sold)

Profit = (Revenue) (Total cost)

Spreadsheet

The spreadsheet values outlined in yellow can be changed in order to determine possible outcomes. You can find the initial values in the corresponding blue cells in columns E and F. Start by entering the initial values into columns B and C. Then review the questions below and adjust the values in columns B and C to determine the correct answers.

Questions:

a. How much revenue does Sue expect from calendars?

multiple choice 1

• $2,000.00

• $3,000.00

• $11,500.00

• $12,000.00

• $13,500.00

b. If Sue increases the price of her calendars to $6.00 and still sells the same quantity, what is the expected profit? (Note: Change the price from $5.00 to $6.00 on the spreadsheet and the program will recompute revenue and profit.) On your sheet of paper, show the calculations that confirm that the program has given you the correct values.

multiple choice 2

• $2,000.00

• $3,000.00

• $4,700.00

• $16,200.00

• $27,000.00

c. By increasing the price of the calendars to $6.00, Sue thinks the number of calendars sold could decrease. What is the minimum number of calendars Sue would have to sell at the new price in order to make a profit?

multiple choice 3

• 1,243

• 1,572

• 1,800

• 1,917

• 2,245

d. Sue is interested in getting an overview of how a change in the price of notebooks would affect revenue and profit, assuming that she sells all 6,000 notebooks she is thinking of ordering. Prepare a tableon your sheet of paperwith column headings for three variables: selling price, revenue, and profit. Show the value for revenue and profit for different possible selling prices for a notebookstarting at a minimum price of $1.60 and adding 8 cents to the price until you reach a maximum of $2.40. At what price will selling 6,000 notebooks contribute $5,400.00 to profit?

multiple choice 4

• $1.60

• $1.68

• $2.00

• $2.24

• $2.40

e. Continuing the previous analysis, at what price would notebook sales contribute only $1,080.00?

multiple choice 5

• $1.60

• $1.68

• $2.00

• $2.24

• $2.40