Question

A small publishing company is planning to publish a new book. The production costs will include one-time fixed costs (such as editing, and variable costs

(such as printing). The one-time fixed costs will total $49,500. The variable costs will be $12 per book. The publisher will sell the finished product to
bookstores at a price of $23.25 per book. How many books must the publisher produce and sell so that the production costs will equal the money from
sales?
OD

Answer 1

Break-even point in units= 4,400

Explanation:

Giving the following information:

Fixed costs= $49,500

Unitary variable cost= $12

Selling price= $23.25

We need to calculate the level of sales that will result in a net profit of zero. We need to use the break-even formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 49,500 / (23.25 - 12)

Break-even point in units= 4,400