Problem 7-8 A book publisher has fixed costs of $320,000 and variable costs per

Question

Problem 7-8 A book publisher has fixed costs of $320,000 and variable costs per book of $10.00. The book sells for $22.00 per copy. a. How many books must be sold to break even? (Roundup your answer to the next whole number.) Books to be sold 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? O Higher Lower It would remain the same OThere is insufficient information to answer this question

Explanation / Answer

A) FC= (P - VC) * Break-even (where FC = fixed cost, P = price, and VC = variable cost).

$300,000 = ($23.00 - $10.00) * Break-even

Break-even = 24,000 books.

B) Higher

C) Lower

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