Question: Variable production and material costs are estimated to be E3 per DVD. Demand over the life of the DVD is estimated to be 4000 copies.

Variable production and material costs are estimated to be E3 per DVD. Demand over the life of the DVD is estimated to be 4000 copies. The publisher plans to sell the DVD to college and university bookstores for E20 each.

a. What is the breakeven point?

b. What profit or loss can be anticipated with a demand of 4000 copies?

c. With a demand of 4000 copies, what is the minimum price per copy that the publisher must charge to break even?

d. If the publisher believes that the price per DVD could be increased to E25.95 and not affect the anticipated demand of 4000 DVDs, what action would you recommend? What profit or loss can be anticipated?

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