You run a business out of your dorm room selling ACC2020 textbooks in both paper and digital versions. The paper version costs you $400 and you can sell it for $600. The digital version costs you $100 and you can sell it for $200. Last semester you sold 10 paper versions and 100 digital versions for total sales of $26,000. You expect that sales mix will continue this semester. - If your semester fixed costs are $6,000 for a publisher's license, what dollar amount of sales will you need to breakeven? - How many paper and digital books will you have to sell to break even? - How much operating income did you have last semester?
You run a business out of your dorm room selling ACC2020 textbooks in both paper and digital versions. The paper version costs you $400 and you can sell it for $600. The digital version costs you $100 and you can sell it for $200.
Last semester you sold 10 paper versions and 100 digital versions for total sales of $26,000. You expect that sales mix will continue this semester.
- If your semester fixed costs are $6,000 for a publisher's license, what dollar amount of sales will you need to breakeven?
- How many paper and digital books will you have to sell to break even?
- How much operating income did you have last semester?
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Contribution margin
The contribution margin is the amount of revenue that is left over after all variable costs have been deducted from total sales. It serves as a barometer for the profitability of specific products or services. On the other hand, profit margin is determined by dividing net income by total sales.
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