P12-6 Breakeven point (a) through (e)

Principles of Managerial Finance 8th Edition, Zutter Smart

JWG Company publishes Creative Crosswords. Last year, the book of puzzles sold for $10, with a variable operating cost of $8 per book and a fixed operating cost of $40,000.

(a) How many books must JWG sell this year to achieve the breakeven point for the stated operating costs if all figures remain the same for last year?

(b) How many books must JWG sell this year to achieve the breakeven point for the state operating costs if fixed operating costs increase to $44,000 and all other figures remain the same?

(c) How many books must JWG sell this year to achieve the breakeven pint for the stated operating costs if the selling price increases to $10.50 and all costs remain the same as for last year?

(d) How many books must JWG sell this year to achieve the breakeven point for the stated operating costs if the variable operating cost per book increases to $8.50 and all other figures remain the same?

(e) What conclusions about the operating breakeven point can be drawn from your answers?