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?

Question

Business

Nolan Orozco

30 July, 17:10

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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Answers (1)

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Bernard Nielsen · Answer 1

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