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Charge to break even on these costs

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Reference no: EM131687500

You are a new paper publisher, You are in the middle of a one year rental contract for your factory that require you to pay $ 700.000 per month, and you have contractual labor obligations of $ 1250 000 per month that you can't get out of. You also have a marginal printing cost of $ 0.25 per paper as well as a marginal delivery cost of $ 0.10 per paper.

Instructions : Round your number to 2 decimal places

a. If sales fall by 20 percent from $ 1000 000 papers per month to $ 800.000 papers per month, What happens to the AFC per paper ?

It ( Rise / Fall )? from ( ) per paper to ( ) per paper

b. What happens to the MC per paper ?

(MC does not change/ MC change ) ?

What happens to the minimum amount that you must charge to break even on these costs ?

It ( Increases/ decreases ) ? from ( ) per paper to ( ) per paper

Reference no: EM131687500

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