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(A) and (B) please?? IPB Press Ltd is considering launching a new monthly magazine at a selling price of 1 per copy. Sales of the
(A) and (B) please?? IPB Press Ltd is considering launching a new monthly magazine at a selling price of 1 per copy. Sales of the magazine are expected to be 500,000 copies per month, but it is possible that the actual sales could differ quite significantly from this estimate. Two different methods of producing the magazine are being considered and neither would involve any additional capital expenditure. The estimated production costs for each of the two methods of manufacture, together with the additional marketing and distribution cost of selling the magazine, are summarised below Method A E0.55 per copy 80,000 per month Method EB 0.50 per copy 120,000 per month Variable Costs Specific Fixed Costs Semi-variable Costs: The following estimates have been obtained: 350,000 copies 450,000 copies 650,000 copies 55,000 per month 65,000 per month 85,000 per month 47,500 per month 52,500 per month 62,500 per month It may be assumed that the fixed cost content of the semi-variable costs will remain constant throughout the range of activity shown. The company currently sells a magazine covering related topics to those that will this existing magazine will be adversely affected. It is estimated that for every ten copies sold of the new publication, sales of the existing magazine will be reduced by one copy Sales and cost data of the existing magazine are shown below: Sales Selling price Variable costs Specific fixed costs 220,000 copies per month 0.85 per copy 0.35 per copy 80,000 per month
(A) and (B) please??
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