Answer to Question #324043 in Macroeconomics for Hes

Question

12. The Central Publishing Company is about to publish its first reference book in mana-

gerial economics. It is now in the process of estimating costs. It expects to produce

10,000 copies during its first year. The following costs have been estimated to correspond

to the expected copies.

a. Paper stock $8,000

b. Typesetting $15,000

c. Printing $50,000

d. Art (including graphs) $9,000

e. Editing $20,000

f. Reviews $3,000

g. Promotion and advertising $12,000

h. Binding $22,000

i. Shipping $10,000

In addition to the preceding costs, it expects to pay the authors a 13 percent royalty and

its salespeople a 3 percent commission. These percentages will be based on the publisher’s

price of $48 per book.

Answer 1

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