Question 1: Find the publisher’s breakeven output and the output that would lead to a total profit of $60,000 if, as a result of a technological breakthrough in printing, the publisher was able to lower its TFC to $40,000.
Question 2: Find the publisher’s breakeven output and the output that would lead to a total profit of $60,000 if total fixed costs remained at $100,000 but average variable costs declined to $ 10.
Total fixed costs:
Copyediting $ 10,000
Typesetting 70,000
Selling & Promotion 20,000
Total fixed costs $100,000
Average variable costs:
Printing & binding $6
Administrative costs 2
Sales commissions 1
Bookstore discounts 7
Author's royalties 4
Average variable costs $20
Project selling price $30