Help me to solve this case question
CCP Publishers
You have been hired by Chris Paraskevopoulos, who is an economics
professor emeritus at your university. After retiring from
teaching, Chris started an academic publishing business, which
publishes university textbooks and trade books, the latter being
academic books written by university professors for academic and
professional audiences.
CCP Publishers is located on the 10th floor of a building in the
northern part of the city. It also leases 500 square metres in the
basement of the building for its warehouse operations. Chris is the
chief editor as well as the CEO. There are four editors in addition
to Chris, three editorial assistants, four marketing
representatives, a business manager (yourself), and a warehouse
supervisor. Chris and the four editors are all equal partners. The
marketing representatives are responsible for selling CCP books to
university and commercial bookstores.
The business model has changed little since CCP was established
three years ago. Authors either contact an editor, or the editor
contacts the author. In either situation, when there is an
agreement between the author (or authors) and an editor that the
book will be economically viable, a contract is signed that
specifies the general content of the book, a publication schedule,
and responsibilities for both CCP and the author or authors. An
editor from CCP works with each author (or author group) in the
development of a book. Currently, 35 books are in various stages of
production. CCP has 42 books in print and available for sale. Most
activities are contracted out, including copyediting, layout, index
development, art work, photography, and printing. After printing,
books are shipped directly to university and commercial
bookstores.
The income statement for the latest fiscal year is shown
below:
Sales $ 975,000
Cost of books sold (210,000)
Salaries and wages (540,000)
Rental (87,000)
Shipping (62,000)
Miscellaneous (52,000)
Operating income $ 24,000
Chris has some concerns about the profitability of CCP. He believes
that CCP should be more profitable. He would to control the
development costs for book. He would also like to know the
profitability of each book, and how that profitability compares
with expectations of the editor when the contract is signed.
Consequently, you were hired as the business manager.
Required
As the business manager, use the case approach to address the CEO's
profitability concerns.
In this case study, following financial information is available
Sales 975000
Exp. % of sales
Cost of Books Sold 210000 21.53
Salaries 540000 55.38
Rental 87000 8.92
Shipping 62000 6.36
Miscellaneous 52000 2.46
Total 951000 97.54
Based on the information available, The CCP is spending almost 77% of its revenue on Salaries and Cost of production of Books. Hence we need to focus in these two areas immediately.
Salaries (We assume that these are fixed remuneration irrespective of the performance)
Since this is the biggest expense head, following changes can be made:
Editors Remuneration
Developmental Cost
With the implementation of the above mentioned decisions, the concern of Mr Chris will e appropriately addressed in the following manner:
Help me to solve this case question CCP Publishers You have been hired by Chris Paraskevopoulos,...
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