Hoot Washington is the newly elected charismatic leader of the Western Party. He is the darling of..

Hoot Washington is the newly elected charismatic leader of the Western Party. He is the darling of the right-wing media. His “take no prisoners” attitude has left many an opponent on a talk show feeling run over by a Mack truck. Media Publishers is negotiating to publish Hoot’s Manifesto, a new book that promises to be an instant bestseller. The fixed costs of producing and marketing the book will be $600,000. The variable costs of producing and marketing will be $4.80 per book. These costs are before any payments to Hoot. Hoot negotiates an up-front payment of $3.60 million plus a 15% royalty rate on the net sales price of each book. The net sales price is the listed bookstore price of $36 minus the margin paid to the bookstore to sell the book. The normal bookstore margin of 30% of the listed bookstore price is expected to apply. REQUIRED 1. How many copies must Media Publishers sell to (a) break even and (b) earn a target operating profit of $2.4 million? 2. Examine the sensitivity of the breakeven point to the following changes: a. Decreasing the normal bookstore margin to 20% of the listed bookstore price of $36. b. Increasing the listed bookstore price to $48 while keeping the bookstore margin at 30%.