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problem: A company is doing an examine of a proposed new finance textbook.

Fixed cost per edition

Development (reviews class testing and so on)

18,000

Copyediting

5,000

Selling and promotion

7000

Typesetting

40,000

Total

70,000

Variable Costs per copy

Printing and binding

4.2

Administration cost

1.6

Salesperson's commission (2% of selling price)

0.6

Author's royalties (12% of selling cost)

3.6

Bookstore discounts (20% of selling cost)

6

Total

$16.00

Projected selling price

$30.00

Marginal tax rate is 40 percent

find out the breakeven volume in units and in dollar sales

Develop a breakeven chart for the textbook

find out the number of copies the must be sold in order to earn an operating profit of

$21,000 on this book

Assume the company feels that $30.00 is too high a price to charge for the new finance textbook. $24.00 would be a better selling price. Determine the breakeven volume be at this new selling price?

 

 

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M916239

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