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Gage Irwin (GI) is a text book publisher. GI sells to bookstores for $60 per book. Each book costs $40 in print costs. The authors make $10 in royalties on each book sold. Advertising and marketing costs are $100,000 per title. Gage Irwin is thinking of creating an e-book for one of its titles. An e-book will have no printing costs but will have an additional fixed cost of $50,000. Comparable e-books sell for $40 each.
Require: SHOW YOUR WORK FOR EACH
Problem 1: Calculate the unit contribution margin in dollars that Gage Irwin makes on each printed textbook.
Problem 2: Calculate the number of print textbooks Gage Irwin must sell in order to break even.
Problem 3: Calculate the number of e-books Gage Irwin must sell in order to break even.
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