8.

A book publisher has fixed costs of $300,000 and variable costs per book of
$8.00. The book sells for $23.00 per copy.
a. How many books must be sold to break even?
b. If the fixed cost increased, would the new break-even point be higher or
lower?
c. If the variable cost per unit decreased, would the new break-even point be
higher or lower?

a. Break-even Point = Fixed cost / (Selling price - Variable cost)

= 300000/(23-8) = 20000
Conclusion: The publisher has to sell 20000 copies of books to break even.
b. Let us assume the fixed cost increased to 10%:
New Fixed Cost = 300000 x 110% = 330000
=> New Break-even Point = 330000/(23-8) = 22000
Conclusion: As the fixed cost increases, so does the break-even point. Therefore, the
new break-even point would be higher.
c. Let us assume the variable Cost decreased by 10%
New variable cost = 8 - 10%x8 = 7.2
=> New Break-even Point = 300000 /(23-7.2) = 18987.342
Conclusion: The Break-even Point decreases as the variable cost decreases.
Therefore, the new break-even point would be lower.