Wakefield Press is doing a financial feasibility analysis for a new book. Editing and preproduction costs are estimated at $85; 000. The printing costs are a Fixed $6; 000 for set up plus $6:50 per book. The author's royalty is 6% per book of the publisher's price to bookstores. Advertising and promotion costs are budgeted at $7; 600.

(a) If the price to bookstores is set at $42:8, how many books must be sold to break even? Find the break-even point algebraically and by using an EXCEL graph. Attach the printout or copy your EXCEL graph into your assignment submission. (Hint: round the Variable cost per unit(v) to its nearest cents.)

(b)The marketing department is forecasting sales of 4; 200 books at the $42:80 price. Based on your graph from part (a), will there be a net profit or net loss from the project at this volume of sales? How do you know? Calculate this net profit or loss amount. (Assume no tax costs.) (c) If the author requires an increase in royalty to 8:5%, how does this impact Wakefield Press? Assuming the fixed costs and the selling price remains as in (a), explain in a short paragraph (3-4 sentences) whether the number of books required to break-even will increase or decrease. Do not re-calculate the break-even quantity, x, for this question however you may quote the break-even formula to aid your explanation. (d) The marketing department is also forecasting that, if the price per book is reduced by 9%, unit sales will be 12% higher. Should Wakefield Press continue with the original price in (a) or this reduced price? Show calculations that support your recommendation. Assume initial fixed and variable cost estimates. (Hint: round the Variable cost per unit(v) and Sales price per unit(s) to their nearest cents.)