Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web site construction is estimated to be $160,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell single-user access to the book for $46. Consider the following scenarios: Scenario 1Scenario 2Scenario 3Scenario 4Scenario 5Variable Cost/Book$6$8$12$10$11Access Price$46$50$40$50$60Demand2,5001,0006,0005,0002,000For each of these scenarios, the fixed cost remains $160,000. Use Scenario Manager to generate a summary report that gives the profit for each of these scenarios. d.1 Which scenario yields the highest profit? What is the highest profit? d.2 Which scenario yields the lowest profit? What is the lowest profit?

Given that: Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Variable Cost/Book $6 $8…

Answered: Eastman Publishing Company is…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web site construction is estimated to be $160,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell single-user access to the book for $46.

Consider the following scenarios:

	Scenario 1	Scenario 2	Scenario 3	Scenario 4	Scenario 5
Variable Cost/Book	$6	$8	$12	$10	$11
Access Price	$46	$50	$40	$50	$60
Demand	2,500	1,000	6,000	5,000	2,000

For each of these scenarios, the fixed cost remains $160,000. Use Scenario Manager to
generate a summary report that gives the profit for each of these scenarios.

d.1 Which scenario yields the highest profit? What is the highest profit?

d.2 Which scenario yields the lowest profit? What is the lowest profit?

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