KMW Inc Sells a Finance Textbook for $150 Each

question 29

Multiple Choice

KMW Inc. sells a finance textbook for $150 each. The variable cost per book is $30 and the fixed cost per year is $30,000. The process of creating a textbook costs $150,000 and the average book has a life span of 3 years. Using straight line depreciation and a tax rate of 25%, What is the accounting break even number of books that must be sold?

• A) 582
• B) 667
• C) 805
• D) 953

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Definitions:

Statutory Amalgamation

A merger or combination of two or more companies into a new entity, governed and approved by a legal statute.

Reverse Takeover

A scenario where a smaller or a privately-held company takes over a larger or publicly-traded company, often to bypass the lengthy and complex process of going public.

Identifiable Intangible Assets

Assets that can be identified and separated from a company, such as trademarks, patents, and copyrights, which do not have physical substance but have value in a business context.

Fair Value

A measure of the price at which an asset could be bought or sold in a current transaction between willing parties, other than in a liquidation sale.