M & M Company is considering publishing a paperback textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and production setup is estimated to be P100,000. Variable production and material costs are estimated to be P150 per book. Demand over the life of the book is estimated to be 4000 copies. The publisher plans to sell the text to college and university bookstores for P1000 each.

REQUIREMENTS:

a. Formulate the total cost function. b. Formulate the revenue function. c. Formulate the profit function. d. What is the breakeven point? e. What profit or loss can be anticipated with a demand of 4000 copies? f. With a demand of 4000 copies, what is the minimum price per copy that the publisher must charge to break even? g. If the publisher believes that the price per copy could be increased to P1, 297. 50 and would not affect the anticipated demand of 4000 copies, what action would you recommend?

h. What profit or loss can be anticipated?