Question
Company A has commissioned a market research study that found 2% of its monthly visitors to be very interested in getting Company As medical content
Company A has commissioned a market research study that found 2% of its monthly visitors to be very interested in getting Company As medical content in book format. The company is thus considering publishing and selling directly to the public a book of medical information and health advice compiled by the experts on its staff. The fixed cost associated with this effort (i.e., overhead, advances, marketing, editing) is estimated to be $500,000 and the variable unit cost (i.e., paper, printing, binding, shipping) will be $3.75. How many books would Company A need to sell to break even at a retail unit price of $23.99? Now assume that the shipper of Company A wants to employ will not sign up for the contract unless it is guaranteed for at least 25,000 units. Will this contract be signed? Why, or why not?
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