Derst Incorporated sells a particular textbook for $25. Variable expenses are $13 per book. At the current volume of 42,000 books sold per year the company is just breaking even. Given these data, the annual fixed expenses associated with the textbook total:

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Quizplus · Accepted Answer

The break-even point occurs when total revenue equals total expenses. At break-even, the revenue from selling 42,000 books at $25 each is $1,050,000 (42,000 * $25). The variable cost for these books is $546,000 (42,000 * $13). To find the fixed costs, subtract the total variable costs from the total revenue at the break-even point, which gives $504,000 ($1,050,000 - $546,000).

Derst Incorporated Sells a Particular Textbook for $25