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Breakeven analysis

The Goldberg-Scheinman Publishing Company is publishing a new managerial economics test for which it has estimated the following fixed and average variable costs:

Total Fixed Costs:
Copy editing - 10,000
Typesetting - 70,000
Selling and promotion - 20,000
Total fixed costs = 100,000

Average Variable Costs:
Printing and binding - 6.00
Administrative costs - 2.00
Sales commissions - 1.00
Bookstore discounts - 7.00
Author's royalties - 4.00
Average variable costs = 20.00

Project selling price = 30.00

(a) Determine the breakeven output and total sales revenues.
(b) Determine the output that would generate a total profit of $60,000 and the total sales revenues at that output level.

Please help! I do not understand this cost analysis stuff at all.

Solution Preview

(a) Determine the breakeven output and total sales revenues.

Breakeven output is when total revenue = total cost and is calculated as
Berakeven output in units = Fixed cost/unit ...

Solution Summary

The solution explains some calculations relating to breakeven