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.$

$($a$)$ Choose the correct influence diagram that illustrates how to calculate profit.

$($i$)$

The influence diagram shows profit depending on total cost and total revenue. Total cost, in turn, depends on fixed cost and total variable cost. Total variable cost is dependent on variable cost and demand. On the other side, total revenue depends on revenue per unit and demand.

$($ii$)$

The influence diagram shows profit depending on total cost and total revenue. Total cost, in turn, depends on fixed cost and total variable cost. Total variable cost is dependent on variable cost. On the other side, total revenue depends on revenue per unit.

$($iii$)$

The influence diagram shows profit depending on total cost and total revenue. Total cost, in turn, depends on fixed cost and variable cost. Variable cost is dependent on total variable cost and demand. On the other side, total revenue depends on revenue per unit and demand.

$($iv$)$

The influence diagram shows profit depending on total cost and total revenue. Total cost, in turn, depends on fixed cost and labor cost per unit. Labor cost per unit is dependent on material cost per unit and total variable cost. On the other side, total revenue depends on revenue per unit.

Diagram $($iii$)$

$($b$)$ Build a spreadsheet model in Excel to calculate the profit$/$loss for a given demand. What profit can be anticipated with a demand of $3,500$ copies? For subtractive or negative numbers use a minus sign.

$

$($c$)$ Use a data table to vary demand from $1,000$ to $6,000$ in increments of $200$ to assess the sensitivity of profit to demand. Breakeven occurs where profit goes from a negative to a positive value, that is$,$ breakeven is where total revenue $=$ total cost yielding a profit of zero. In which interval of demand does breakeven occur?

$($i$)$ Breakeven appears in the interval of $3,600$ to $3,800$ copies.

$($ii$)$ Breakeven appears in the interval of $4,000$ to $4,200$ copies.

$($iii$)$ Breakeven appears in the interval of $4,200$ to $4,400$ copies.

$($iv$)$ Breakeven appears in the interval of $4,400$ to $4,600$ copies.