Operations Management Question that has to do with break ever point. This is all

Question

Operations Management Question that has to do with break ever point. This is all one problem

A book publisher has fixed costs of $320,000 and variable costs per book of $10.00. The book sells for $22.00 per copy a. How many books must be sold to break even? (Roundup your answer to the next whole number) Books to be sold b. If the fixed cost increased, would the new break-even point be higher or lower? Higher Lower It would remain the same There is insufficient information to answer this question c. If the variable cost per unit decreased, would the new break-even point be higher or lower? A Higher Lower It would remain the same There is insufficient information to answer this question

Explanation / Answer

Fixed cost = $320000

Variable cost = $10 per book

Revenue = $22 per copy

a) Break even point = Fixed cost / (Revenue - Variable cost)

= 320000 / (22-10)

= 320000/12

= 26666.67 or rounded to 26667 books

So 26667 books must be sold to break even

b) If the fixed cost increases the new break even point would be higher

C) If the variable cost per unit decreases the break even point would be lower.

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