Computation of break even points.
East Publishing Company is doing an analysis of a proposed new finance text book. Using the following data, answer a through d.
Fixed costs per edition:
|
Development
|
$18,000
|
|
Copyediting
|
$5,000
|
|
Selling/Promo
|
$7,000
|
|
Typesetting
|
$40,000
|
|
Total
|
$70,000
|
Variable costs per copy:
|
Printing/bind
|
$4.20
|
|
|
Admin costs
|
$1.60
|
|
|
Sales comm.
|
$0.06
|
2% of selling price
|
|
Royalties
|
$3.60
|
12% of selling price
|
|
Discounts
|
$6.00
|
20% of selling price
|
|
Total
|
$16.00
|
|
Projected selling price $30.00
Tax rate is 40%
Determine the number of copies East must sell in order to earn an (operating) profit of $21,000 on this book.