You are a new paper publisher, You are in the middle of a one year rental contract for your factory that require you to pay $ 700.000 per month, and you have contractual labor obligations of $ 1250 000 per month that you can't get out of. You also have a marginal printing cost of $ 0.25 per paper as well as a marginal delivery cost of $ 0.10 per paper.
Instructions: Round your number to 2 decimal places
a. If sales fall by 20 percent from $ 1000 000 papers per month to $ 800.000 papers per month, What happens to the AFC per paper?
It ( Rise / Fall )? from ( ) per paper to ( ) per paper
b. What happens to the MC per paper ?
( MC does not change/ MC change ) ?
What happens to the minimum amount that you must charge to break even on these costs ?
It ( Increases/ decreases) ? from ( ) per paper to ( ) per paper