Derst Inc.sells a particular textbook for $140.Variable expenses are $25 per book.At the current volume of 6,000 books sold per year the company is just breaking even.Given these data,the annual fixed expenses associated with the textbook total:
A) $400,000
B) $690,000
C) $840,000
D) $150,000

Question

Quizplus · Accepted Answer

Unit CM = Selling price per unit - Variable expenses per unit
= $140 per book - $25 per book = $115 per book
Unit sales to break even = Fixed expenses ÷ Unit CM
6,000 books = Fixed expenses ÷ $115 per book
Fixed expenses = 6,000 books × $115 per book = $690,000

Derst IncSells a Particular Textbook for $140