Problem: The Goldberg-Scheinman Publishing Company is publishing a new managerial economics test for which it has estimated the following fixed and average variable costs:
Total Fixed Costs:
Copy editing - 10,000
Typesetting - 70,000
Selling and promotion - 20,000
Total fixed costs = 100,000
Average Variable Costs:
Printing and binding - 6.00
Administrative costs - 2.00
Sales commissions - 1.00
Bookstore discounts - 7.00
Author's royalties - 4.00
Average variable costs = 20.00
Project selling price = 30.00
Q1. Determine the breakeven output and total sales revenues.
Q2. Determine the output that would generate a total profit of $60,000 and the total sales revenues at that output level.