Problem 7-3 Eastman Publishing Company is considering publishing an electronic t
ID: 3209297 • Letter: P
Question
Problem 7-3 Eastman Publishing Company is considering publishing an electronic textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and website construction is estimated to be $160,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell access to the book for $46 each.
Use Goal Seek to answer the following question. With a demand of 3,500 copies, what is the access price per copy that the publisher must charge to break even? If required, round your answers to two decimal places.Explanation / Answer
Selling price 47 Less: Variable Cost 6 Contribution per unit 41 Units 3200 Total Contribution 131200 3200*41 Less: Fixed Costs 155000 Loss -23800 2 Break Even = Fixed Cost/ Contribution per unit 3200= 155000/x-6 x-6= 155000/3200 x-6= 48.4375 X = 48.43+6 X = 54.43 The selling price should be $ 54.43 per copy to break even