A book publisher has fixed costs of $340,000 and variable costs per book of $9.0

Question

A book publisher has fixed costs of $340,000 and variable costs per book of $9.00. The book sells for $20.00 per copy.

a. How many books must be sold to break even? (Roundup your answer to the next whole number.

b. If the fixed cost increased, would the new break-even point be higher or lower?

Higher

Lower

It would remain the same

There is insufficient information to answer this question

c. If the variable cost per unit decreased, would the new break-even point be higher or lower?

Higher

Lower

It would remain the same

There is insufficient information to answer this question

Explanation / Answer

Fixed Cost = 340,000 $

Variable Cost = 9 $ per unit

Selling price = 20 $ per unit

a. Breakeven = FC/ (Selling Price – Variable cost)

= 340,000/11 = 30909.09 = 30,909 units

b. If fixed cost is increased, breakeven units will increase.

c. If variable cost is decreased, breakeven units will decrease.

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