The Goldberg-Scheinman Publishing Company is publishing a new managerial economics text for which it has estimated the following total 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
Administrative costs 2
Sales commission 1
Bookstore discounts 7
Author's royalties 4
Average variable costs $20
Project selling price $30
a) Determine the breakeven output and total sales revenues.
b) Determine the output that would generate a total profit of $60,000 and the total sales revenues at that output level.