Question

suppose that a small publisher selling to book distributors has fixed operating costs of $600,000 each year and variable costs of $3.00 per book. how many books must the firm sell to break even if the selling price is $6.00

Answer 1

If the selling price is $6.00,  the break-even point will be achieved when the number of books sold is  200,000 units.

Break-even point (BEP) is a situation in which the profit is zero or the company does not gain profit or loss.

Recall that:

Profit = revenue - total cost

Since profit = 0, hence the condition for break-even point is:

revenue = total cost

Revenue = number of units sold x selling price per unit

Total cost = fixed cost + variable cost per unit x number of units sold

In the given problem, given parameters are:

selling price = $6.00

fixed operating cost = $600,000

variable cost = $3.00 per book

Let:

p = number of unit sold

Hence,

revenue = 6 x p = 6p

total cost = 600,000 + 3p

Condition for BEP:

revenue = total cost

6p = 600,000 + 3p

3p = 600,000

p = 600,000/3 = 200,000

Hence, the BEP achieved if the number of books sold is  200,000 units.

Learn more about break-even point here:

brainly.com/question/21137380

#SPJ4