Question

Derst Inc. sells a particular textbook for $22. Variable expenses are $13 per book. At the current volume of 51,000 books sold per year the company is just breaking even. Given these data, the annual fixed expenses associated with the textbook total:a. $352,000
b. $1,276,000
c. $1,628,000
d. $924,000

Answer 1

Answer:

None of the choice is correct;  The correct answer is $459,000

Explanation:

The company is just breaking even at current volume of 51,000 books sold per year, then its revenue = total cost

↔ unit sold * selling price = fixed cost + unit sold * variable cost

↔  51,000 * $22 = fixed cost + 51,000 * $13

↔ Fixed cost = $1,122,000 - $663,000

↔ Fixed cost = $459,000