| The following data relate to a popular book sold by a publisher: | |||||||||
| Fixed Costs: | |||||||||
| Copy Editing $ | 6,240 | ||||||||
| Artwork $ | 2,150 | ||||||||
| Typesetting $ | 73,250 | ||||||||
| Variable Costs per copy: | |||||||||
| Printing and Binding $ | 3.25 | ||||||||
| Bookstore Discounts $ | 4.50 | ||||||||
| Sales Commissions $ | 0.65 | ||||||||
| Author’s Royalties $ | 2.15 | ||||||||
| Each novel copy sells for $ | 20 | ||||||||
| Last month the company sold in copies: | 10,000 | ||||||||
| Required: Calculate the break-even point in copies (unit). (Round your answer to the nearest whole unit) | |||||||||
Calculation of break even point in copies (unit) :
Fixed cost: ($).
Copy editing. 6,240
Art work. 2,150
Type setting. 73,250
Total fixed cost. 81,640
Variable cost per unit:
Printing and binding. 3.25
Book store discount. 4.5
Sales commission. 0.65
Author's royalty. 2.15
Total variable cost per unit. 10.55
Selling price per unit. $ 20
Break even analysis:
Contribution per unit = selling price per unit - variable cost per unit
= $ 20 - $10.55
= $ 9.45
Break even point in units = Fixed cost/ contribution per unit
= $ 81, 640 / $ 9.45
= 8,640 units ( rounded off)
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