East Publishing Company is doing an analysis of a proposed new finance text. Using the following data, answer parts a through e.
The company’s marginal tax rate is 40 percent.
a. Determine the company’s breakeven volume for this book.
i. In units
ii. In dollar sales
b. Develop a breakeven chart for the text.
c. Determine the number of copies East must sell in order to earn an (operating) profit of $21,000 on this text.
d. Determine total (operating) profits at the following sales levels:
i. 3,000 units
ii. 5,000 units
iii. 10,000 units
e. Suppose East feels that $30.00 is too high a price to charge for the new finance text. It has examined the competitive market and determined that $24.00 would be a better selling price.What would the breakeven volume be at this new selling price?
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