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7 January, 02:58

Derst Inc. sells a particular textbook for $27. Variable expenses are $20 per book. At the current volume of 43,000 books sold per year the company is just breaking even. Given these data, the annual fixed expenses associated with the textbook total:

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  1. 7 January, 03:39
    0
    fixed cost = $301,000

    Explanation:

    Break even = fixed cost / contribution per unit

    contribution = selling price - variable cost

    contribution = 27 - 20 = $7

    fixed costs = break even * contribution

    = 43000*7 = 301,000
  2. 7 January, 06:51
    0
    The annual fixed expenses associated with the textbook is $301,000.

    Explanation:

    Selling Price = $27

    Variable Cost = $20 per unit

    Contribution margin = $27 - $20 = $7 per unit

    Break-even = 43,000 units

    Fixed Cost = ?

    Use Break-even formula to calculate fixed cost

    Break-even = Fixed cost / Contribution per unit

    43,000 = Fixed cost / $7

    Fixed Cost = 43,000 x $7

    Fixed Cost = $301,000
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