Break-even analysis. The publisher in Problem 59 finds that rising prices for paper increase the variable costs to $2.10 per book.
(A) Discuss possible strategies the company might use to deal with this increase in costs.
(B) If the company continues to sell the books for $11, how many books must they sell now to make a profit? (C) If the company wants to start making a profit at the same production level as before the cost increase, how much should they sell the book for now?
Reference:
Break-even analysis. A publisher for a promising new novel figures fixed costs (overhead, advances, promotion, copy editing, typesetting) at $55,000, and variable costs (printing, paper, binding, shipping) at $1.60 for each book produced. If the book is sold to distributors for $11 each, how many must be produced and sold for the publisher to break even?
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