Question

A small publishing company is planning to publish a new book. The production costs will include onetime fixed costs (such as editing) and variable costs ( such as printing). There are two production methods it could use. With one method, the one-time fixed costs will total $44,641, and the variable costs will be $12.25 per book. With the other method, the one time fixed costs will total $18,720, and the variable costs will be $24.50 per book. For how many books produced will the costs from the two methods be the same

Answer 1

First you have to subtract the two one time costs to find the cost delta:

44,641 - 18,720 = 25,921

Then you would have to subtract the variable costs to find the delta:

24.50 - 12.25 = 12.25 per book

Since we know that the 25921 isn't changing we need to divide by the delta of 12.25 per book to find out how many books it will take to make up the 25921

25,921/12.25 = 2116 Books