You are newspaper publisher. You are in the middle of a one-year rental contract for your factory
Question:
You are newspaper publisher. You are in the middle of a one-year rental contract for your factory that requires you to pay 500,000 per month and you have contractual labor obligations of 1million per month that you cant get out of. You also have a marginal delivery cost of 0.25 per paper as well as a marginal delivery cost of 0.10 per paper.
Instructions: Round your answers to 2 decimal places.
a. If sales fall by 20 percent from 1,000,000 papers per month to 800,000 papers per month, what happens to the AFC per paper? It (falls/rises) from $______ per paper to $______ per paper.
b. What happens to the MC per paper? (MC changes/MC does not change)
c. What happens to the minimum amount that you must charge to break even on these costs? It (decreases/increases) from $______ per paper to $______ per paper.
College Mathematics for Business Economics Life Sciences and Social Sciences
ISBN: 978-0321614001
12th edition
Authors: Raymond A. Barnett, Michael R. Ziegler, Karl E. Byleen