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How much more money can the publisher put into advertising

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Question - Elephant Books sells paperback books for $7 each. The variable cost per book is $5. At current annual sales of 200,000 books, the publisher is just breaking even. It is estimated that if the Elephant Books advertise, they can sell their paperback books for $10 instead of $7 per book. Assume authors' royalties and variable cost per book stay the same and unit sold remain constant; how much more money can the publisher put into advertising (a fixed cost) and still reach a break even and keep its operating leverage constant?

Reference no: EM133148305

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