Question

a publisher for a promising new novel figures fixed costs (overhead, advances, promotion, copy editing, typesetting, and so on) at $55,000, and variable costs (printing, paper, binding, shipping) at $1.30 for each book produced. with this pricing, 5141 books need to be produced and sold at $12.00 each for the publisher to break even. however, rising prices for paper require an increase in variable costs to $1.80 for each book produced. use this information to complete parts a. through c. a. what strategies might the company use to deal with this increase in costs? choose all that are reasonable. a. increase the font size of the print in the book. b. find different suppliers to try and lower the variable costs. c. decrease the fixed costs. d. increase the selling price of the book.

Explanation:

• Option A: Increasing font size would likely increase paper usage (thus variable costs) or reduce pages but is not a standard cost - reduction strategy for variable cost increase due to paper price, so not reasonable.
• Option B: Finding different suppliers can help lower variable costs (like paper cost), which is a direct way to deal with increased variable costs.
• Option C: Decreasing fixed costs (overhead, advances, etc.) can improve the break - even point and deal with cost increases.
• Option D: Increasing the selling price can increase revenue, which can offset the increased variable costs and help in breaking even.

Answer:

B. Find different suppliers to try and lower the variable costs.
C. Decrease the fixed costs.
D. Increase the selling price of the book.