Question
A publishing company examines its printing, distribution, and marketing costs over four months. Month Books Printed Printing Cost Cost per Book (Printing) Distribution Cost Cost
A publishing company examines its printing, distribution, and marketing costs over four months.
| Month | Books Printed | Printing Cost | Cost per Book (Printing) | Distribution Cost | Cost per Book (Distribution) | Marketing Cost | Cost per Book (Marketing) |
|---|---|---|---|---|---|---|---|
| 1 | 5,000 | $10,000 | $7,500 | $3,000 | |||
| 2 | 10,000 | $10,000 | $10,000 | $5,000 | |||
| 3 | 2,500 | $10,000 | $5,000 | $1,500 | |||
| 4 | 7,500 | $10,000 | $8,000 | $4,500 |
Required: a. Compute the cost per book for each cost. b. Classify each cost as fixed, variable, or mixed. c. Discuss the impact of these cost behaviors on book pricing and profitability. d. Evaluate the effect of cost behavior on the company’s marketing strategy. e. Recommend cost management strategies for printing, distribution, and marketing.
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Advanced Financial Accounting
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay
6th edition
978-0137030385
