Question

Derst Inc. sells a particular textbook for $27. Variable expenses are $20 per book. At the current volume of 43,000 books sold per year the company is just breaking even. Given these data, the annual fixed expenses associated with the textbook total:

Multiple Choice

$860,000

$1,161,000

$1,462,000

$301,000

Answer 1

$301,000

Step-by-step explanation:

Break even point is the number of units that must be sold be an entity for it to make no profit or loss. it is the number of units that must be sold for the total sale to equal the total cost.

The cost is broken into the fixed and variable elements.

Let the fixed expense be Y

$27(43000) = $20(43000) + Y

Y = $27(43000) - $20(43000)

Y = $301,000