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17 November, 00:23

SHAPE magazine is targeted at young women seeking healthier lifestyles. At a price of $3 per copy, 1.25 million copies are sold. If the price per issue is increased to $3.25, only 1 million copies would be sold. Fixed costs are $1 million and unit variable costs are $0.50 per magazine. From the information provided here, what is SHAPE magazine's total revenue obtained at the lower $3 price?

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  1. 17 November, 00:51
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    Total Revenue amounts to $3,750,000 of Shape magazine

    Explanation:

    The total amount of revenue would be computed as below:

    Total Revenue = Number of Copies that are sold * Price Per Copy

    where

    Number of copies being sold is 1,250,000

    Price per copy is $3

    By putting the values in the above formula:

    Total Revenue = 12,50,000 * $3

    = $3,750,000
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