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8 January, 22:56

A publisher for a promising new novel figures fixed costs (overhead, advances, promotion, copy editing, typesetting, and so on) at $53,000 and variable costs (printing, paper, binding, shipping) at $2.20 for each book produced. If the book is sold to distributors for $12 each, how many must be produced and sold for the publisher to break even?

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  1. 8 January, 23:08
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    x = 5,408 Books

    Explanation:

    Cost equations

    c (x) = 2.20x + 53,000

    Revenue equation

    r (x) = 12x

    Break even is when Revenue = cost

    12x = 2.20x + 53000

    12x - 2.20x = 53000

    9.8x = 53000

    x = 53,000/9.8

    x = 5,408 Books

    Prove

    Rev: 12 (5,408) = $64,896.00

    Cost: 2.20 (5,408) + 53,000

    =11,897.6+53,000 = 64,897.6

    Therefore 5,408 books must be produced and sold for the publisher to break even.
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