Contribution margin and ratios for publishing books
Not what you're looking for?
The costs of publishing a grade school textbook can be assumed to be as follows:
Fixed expenses for each new edition of the book:
Copy editing $3,000
Art work $1,000
Typesetting $36,000
Variable expenses per copy of the book:
Printing and binding $2.60
Bookstore discounts $2.00
Salespersons' commissions 0.40
Author's royalties $1.00
Each book sells for $20 per copy.
The unit contribution margin for each copy of the book is: _________________
The contribution margin ratio for the textbook is: _________________________
The publishing company is currently selling 8,000 copies of the textbook per edition but management feels that sales could be increased by 1,000 books if the selling price per book was reduced by $1.00 per copy. Implementing such a policy should result in:
_______________________________________________________
The break-even point in total sales revenue at the price of $12 per copy is: ___________________________
Purchase this Solution
Solution Summary
The solution explains how to calculate the contribution margin and the contribution margin ratio for book publishing business.
Solution Preview
The unit contribution margin for each copy of the book is: _________________
Unit contribution margin = Selling price per unit - variable cost per unit
Selling Price is given as $20
The variable expenses are
Printing and binding $2.60
Bookstore discounts $2.00
Salespersons' commissions 0.40
Author's royalties $1.00
The total variable cost is 2.60+2.00+0.40+1.00 = $6.00
Unit ...
Purchase this Solution
Free BrainMass Quizzes
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Introduction to Finance
This quiz test introductory finance topics.