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?
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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