The following data relate to a company that produces and sells a travel guide that is updated monthly:

The following data relate to a company that produces and sells a travel guide that is updated monthly:

Fixed costs:

Copy editing........................................... $6,000

Art work.................................................. $2,000

Typesetting............................................. $72,000

Variable costs:

Printing and binding............................... $3.20 per copy

Bookstore discounts................................ $4.00 per copy

Salespersons' commissions.................... $0.50 per copy

Author's royalties................................... $2.00 per copy  SOLUTION

Each book sells for $20.00. The company sold 8,000 books in June and 10,000 books in July.

104. The unit contribution margin per book is: A) $10.30 B) $14.30 C) $10.80 D) $8.30 SOLUTION

105. The contribution margin ratio for the book is: A) 71.5% B) 54.0% C) 51.5% D) 51.9%

106. The break-even point in units is: A) 8,247 books B) 7,767 books C) 7,407 books D) 6,504 books

107. The degree of operating leverage for July is: A) the same as that for June B) higher than that for June C) lower than that for June D) not determinable

108. The degree of operating leverage for July is closest to:

A) 4.48

B) 3.48

C) 4.22

D) 8.70

SOLUTION