Rudy Publishing is a text book publisher. Rudy sells to bookstores for $70 per book. Each book costs $45 in print costs. The authors make $15 in royalties on each book sold. Advertising and marketing costs are $100,000 per title. Rudy Publishing is thinking of creating an e-book for one of its titles. An e-book will have no printing costs but will have an additional fixed cost of $50,000. Comparable e-books sell for $45 each.


Required.

a) (2 marks) With respect to the number of textbooks being sold, what type of cost is the authorís royalty?

b) (2 marks) Calculate the unit contribution margin in dollars that Rudy Publishing makes on each printed textbook.

c) (4 marks) Calculate the number of print textbooks Rudy Publishing must sell in order to break even.

d) (4 marks) Calculate the number of e-books Rudy Publishing must sell in order to break even.

Answer rating: 100% (QA)

a The authors royalty is a variable cost because it varies directly with the number of textbooks bei... View the full answer