A publisher for a promising new novel figures fixed costs (overhead, advances, promotion, copy editing, typesetting, and so on) at $55,000, and variable costs (printing, paper, binding, shipping) at $2.30 for each book produced. With this pricing, 5671 books need to be produced and sold at $12.00 each for the publisher to break even. However, rising prices for paper require an increase in variable costs to $2.80 for each book produced. Use this information to complete parts a. through c. a. What strategies might the company use to deal with this increase in costs? Choose all that are reasonable. A. Decrease the fixed costs. B. Find different suppliers to try and lower the variable costs. C. Increase the font size of the print in the book. D. Increase the selling price of the book. b. If the company continues to sell books at $12, how many books must they now sell to make a profit? The publisher must produce and sell at least nothing books to make a profit. (Round up to the nearest whole book.) c. If the company wants to start making a profit at the same production level as before the cost increase from $2.30 to $2.80, how much should the publisher sell the book for now? In order for the company to start making a profit at the same production level as before, the publisher should sell the book for more than the break even point, which is approximately $ (Round to the nearest cent as needed.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A publisher for a promising new novel figures fixed costs (overhead, advances, promotion, copy editing, typesetting, and so on) at

$55,000,

and variable costs (printing, paper, binding, shipping) at

$2.30

for each book produced. With this pricing,

5671

books need to be produced and sold at

$12.00

each for the publisher to break even. However, rising prices for paper require an increase in variable costs to

$2.80

for each book produced.

Use this information to complete parts a. through c.

a. What strategies might the company use to deal with this increase in costs? Choose all that are reasonable.

Decrease the fixed costs.

Find different suppliers to try and lower the variable costs.

Increase the font size of the print in the book.

Increase the selling price of the book.

b. If the company continues to sell books at

$12,

how many books must they now sell to make a profit?

The publisher must produce and sell at least

nothing

books to make a profit.

(Round up to the nearest whole book.)

c. If the company wants to start making a profit at the same production level as before the cost increase from

$2.30

$2.80,

how much should the publisher sell the book for now?

In order for the company to start making a profit at the same production level as before, the publisher should sell the book for more than the break even point, which is approximately

(Round to the nearest cent as needed.)

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