Question 1
DeLong Inc. has fixed operating costs of $510,000, variable costs of $3.20 per unit produced, and its products sell for $5 per unit. What is the company’s break-even point; that is, at what unit sales volume would income equal costs?
◦
283,333
◦
296,667
◦
310,813
◦
345,403
Question 2
Elephant Books sells paperback books for $8 each. The variable cost per book is $6. At current annual sales of 300,000 books, the publisher is just breaking even. It is estimated that if the authors’ royalties are reduced, the variable cost per book will drop by $1.50. Assume authors’ royalties are reduced and sales remain constant; how much more money can the publisher put into advertising (a fixed cost) and still break even?
◦
$200,000
◦
$310,000
◦
$450,000
◦
$550,000
A decorated Indian elephant in Jaipur, India.
The reflection nebula NGC 1999 is brilliantly illuminated by V380 Orionis (center), a variable star
Baby elephant and its mother
Summary of Single Variable Discrete Models