Question
The costs of publishing a grade school textbook can be assumed to be as follows. Fixed expenses for each new edition of the book: Copy
The costs of publishing a grade school textbook can be assumed to be as follows.
Fixed expenses for each new edition of the book:
Copy editing $3,000
Art work $1,000
Typesetting $36,000
Variable expenses per copy of the book:
Printing and binding $1.60
Bookstore discounts $2.00
Salespersons' commissions $0.25
Author's royalties $1.00
Each book sells for $10 per copy.
The publishing company is currently selling 8,000 copies of the textbook per edition but management feels that sales could be increased by 1,000 books if the selling price per book was reduced by $1.00 per copy.
Implementing such a policy should result in:
A. an increase in total contribution margin of $5,150.
B. a decrease in total contribution margin of $4,150.
C. a decrease in total contribution margin of $3,850.
D. an increase in total contribution margin of $4,850.
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