Blue Sunset Band Is Planning to Record a New Album

Essay

Blue Sunset Band is planning to record a new album. A major decision to be made is if the band can record the album on their own, or if they should hire a studio to record it with. The fixed cost for recording at the studio is $100,000, plus the manufacturing cost per CD, which is at $5. If they record the album in-house, the cost per CD is $10. They plan to produce 3000 copies of the album regardless of the place of recording. If the band wished to break even with the cost, how can they achieve this by using the Goal Seek feature in Excel? $\begin{array}{|l|l|l|}\hline& \text { A } & \text { B } \\\hline 1 & \begin{array}{l}\text { The Blue Sunset Band } \\\text { Album Recording Decision }\end{array} & \\\hline 2 & \\\hline 3 & \text { Data } \\\hline 4 & \\\hline 5 & \text { Recording at Studio } \\\hline 6 & \text { Fixed Cost } & \$ 100,000 \\\hline 7 & \text { Unit CD Cost } & \$ 5\\\hline 8 & & \\\hline 9 & \text { Recording In-house } & \\\hline 10 & \text { Unit CD Cost } & \$ \\\hline 11 & & \\\hline 12 & \text { Production Volume } & 3000 \\\hline 13 & & \\\hline 14 & \text { Model } & \\\hline 15 & & \\\hline 16 & \text { Total studio manufacturing cost } & \$ 115,000 \\\hline 17 & \text { Total in-house manufacturing cost } & \$ 30,000 \\\hline 18 & & \\\hline 19 & \text { Cost Difference } & \$ 85,000 \\\hline 20 & \text { Recording Decision } & \text { In-house } \\\hline\end{array}$