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    Contribution margin and ratios for publishing books

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    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: ___________________________

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    https://brainmass.com/business/accounting/contribution-margin-ratios-publishing-books-186485

    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 ...

    Solution Summary

    The solution explains how to calculate the contribution margin and the contribution margin ratio for book publishing business.

    $2.19

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