The below is an accounting problem that needs a Cost Volume Profit anlysis preformed. From the $12.50 per unit to the $40,000 publisher earned is the first part. The $8.75 is the second part. I need to complete a CVP and compare the two. I can complete the Contribution Income Statement on the first section with Net Operating Income of $40,000.00, but I'm not sure how to proceed. This is what I'm trying to solve: The Greenleaf Publishing Company currently pays the author a 70% royalty on all units sold, but the author forgoes advances and pays Greenleaf to market, print, and edit the book. This is a bit different from the traditional payment method of Greenleafs competitors. They tend to employ a more traditional approach to compensating their authors in that they provide an advance to write the book, and then incur the expenses to market, print, and edit the manuscript. The publisher also pays the author a royalty on each unit sold above a certain threshold. Management has noticed a decline in the number of authors seeking to publish with the Greenleaf

$12.50	per unit
10,000	copies of a new book
$20,000.00	pays the author an advance to write the book
$60,000.00	market print and edit expenses
$2.50	per unit royalty
20%	royalty
8,000	royalty fee paid on 8,000 or above
6,400	book to break even
	80,000 in fixed costs / 12.50 per unit
$25,000.00	10,000 copies sold author earns
	20,000 advance + 2,000 copies x $2.50
$40,000.00	publisher earns
	$125,000 - $60,000 -$20,000 -$5,000
$8.75	per unit royalty
70%	royalty
	royalty fee paid on all units
	author gives up the $20,000 advance
	pays $60,000 to market print and edit the books
10,000	units are sold
$27,500.00	author earns
	10,000 units x 8.75 -$60,000
$37,500.00	Greenleaf earns
	10,000 units x (12.50 -8.75)