Question

A book publisher has fixed costs of $380,000 and variable costs per book of $11.00. the book sells for $27.00 per copy.

a. how many books must be sold to break even? (roundup your answer to the next whole number.)

Answer 1

The book publisher needs 380,000 in margins on its books to cover its fixed costs.

The publisher makes a profit of 27-11= 16 dollars per book. This is the book’s contributing margin.

To break even, the profits on the books must equal the fixed costs.

380,000 / 16 =23,750
The firm must sell 23,750 books to break even.