Question

In: Statistics and Probability

1) Book Publishing You are the owner of a publishing firm and you have a new...

1) Book Publishing

You are the owner of a publishing firm and you have a new author that you plan to publish. It is an action/espionage novel. You believe that the author has a good book, but it is her first book and you don’t really know what the sales numbers will look like. As such, you want to do a break even analysis to find out how many books you have to sell in order to get back your initial investment.

The book will be published in paperback sized 6”x9”. The initial set up cost for setting up the press for the book is $900 dollars. After the additional cost for setting up the press, each book will cost $2.19 each to make.

a) How much will it cost to print _ books?

o 100 books

o 200 books

o 500 books

o 1000 books

o 2000 books

b) What is the cost per book for each quantity?

Solutions

Expert Solution

We have the equation cost to prinkt x books = 900+ 2.19x

where 900 is the fixed initial setup cost and 2.19 is cost to make each book

(A)

(1)Cost to print 100 books, i.e. x = 100

setting the value in the equation, we get

Required cost = 900 + 2.19*100 = 900+ 219=$1,119

(2)Cost to print 200 books, i.e. x = 200

setting the value in the equation, we get

Required cost = 900 + 2.19*200 = 900+ 438=$1,338

(3)Cost to print 500 books, i.e. x = 500

setting the value in the equation, we get

Required cost = 900 + 2.19*500 = 900+ 1095=$1,995

(4)Cost to print 1000 books, i.e. x = 1000

setting the value in the equation, we get

Required cost = 900 + 2.19*1000 = 900+ 2190=$3,090

(5)Cost to print 2000 books, i.e. x = 2000

setting the value in the equation, we get

Required cost = 900 + 2.19*2000 = 900+ 4380=$5,280

(B) Cost per book = total cost/(number of books)

Cost per book for 100 books = 1119/100 = $11.19

Cost per book for 200 books = 1338/200 = $6.69

Cost per book for 500 books = 1995/500 = $3.99

Cost per book for 1000 books = 3090/1000 = $3.09

Cost per book for 2000 books = 5280/2000 = $2.64

orchestra answered 1 year ago
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