Elephant Books Sells Paperback Books for $7 Each

question 32

Multiple Choice

Elephant Books sells paperback books for $7 each.The variable cost per book is $5.At current annual sales of 200,000 books,the publisher is just breaking even.It is estimated that if the authors' royalties are reduced,the variable cost per book will drop by $1.Assume authors' royalties are reduced and sales remain constant; how much more money can the publisher put into advertising (a fixed cost) and still break even?

• A)$600,000
• B)$466,667
• C)$333,333
• D)$200,000

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