Question:
Elephant books sells paperback books for $7 each. The variable cost per book is $5. at current annual Sales of 200,000 books, the publisher is just breaking even. It is estimated that if the authors royalties are reduced, the variable cost per book will drop by $1. Assume authors royalties are reduced and sales remain constant; how much more money can the publisher put into advertising (a fixed cost) and still break even?