Prepare a breakeven chart for the textbook

Assignment Help Financial Accounting

Reference no: EM1314716

Computation of Break even points.

East Publishing Company is doing an analysis of a proposed new finance textbook. Using the following data, answer (a) through (d).

Fixed Costs per Edition:
Development (reviews, class testing, etc.	18,000
Copyediting	5,000
Selling and Promotion	7,000
Typesetting	40,000
Total	70,000
Variable costs per copy:
Printing and Binding	4.20
Administrative costs	1.60
Salespeople's commission (2% of selling price)	0.60
Author's royalties (12% of selling price)	3.60
Bookstore discounts (20% of selling price)	6.00
Total	16.00
Projected selling price	30.00

The company's marginal tax rate is 40%.

a) Determine the company's breakeven volume for this book:

1. In units

2. In dollar sales

b) Develop a breakeven chart for the textbook.

c) Determine the number of copies East must sell in order to earn an (operating) profit of $21,000 on this book.

d) Suppose East feels that $30 is too high a price to charge for the new finance textbook. It has examined the competitive market and determined that $24,000 would be a better selling price. What would the breakeven volume be at this new selling price?

Reference no: EM1314716

Questions Cloud

Solve the algebraic expression from subtracting rule : Solve the algebraic expression from subtracting rule.

Calculation of contribution margin : Calculation of Contribution margin and gross margin using Marginal costing - The company had no beginning or ending inventories and evaluate gross margin for December

Utility maximization choice with current income : Bridget has limited income and consumes only wine and cheese; her current consumption choice is four bottles of wine and 10 pounds of cheese.

What is the ratio of amplitude of the damped : The bullet penetrates into the block and stops due to its friction with the block. The compound system of the block plus the bullet rises to a height of 11 cm along a circular arc with a 20 cm radius A bullet with a m1 = 30.0 g mass is fired horizont..

Prepare a breakeven chart for the textbook : Prepare a breakeven chart for the textbook and Determine the number of copies East must sell in order to earn an (operating) profit of $21,000 on this book.

Value of z required for rejection : Given the same significance level, a ________ value of t will be required to reject the null hypothesis compared to the value of z required for rejection.

The construction of wind and solar power plants : Presume your local government wants to raise your taxes in order to support the construction of wind and solar power plants that can give your town with low-polluting energy and help decrease your town's dependence on fossil fuels for energy. Would y..

Algebraic expression by subtracting rule : Algebraic expression by subtracting rule.

Analysis of price elasticity and price increase : In an article about the financial problems of the USA today, Newsweek reported that the paper was losing about $20 million a year.

User Account

All Pages