Southeast U's Campus Book Store Sells Course Packs for $15

Southeast U's campus book store sells course packs for $15.00 each,the variable cost per pack is $11.00,fixed costs for this operation are $300,000,and annual sales are 100,000 packs.The unit variable cost consists of a $4.00 royalty payment,V_R,per pack to professors plus other variable costs of V_O = $7.00.The royalty payment is negotiable.The book store's directors believe that the store should earn a profit margin of 10% on sales,and they want the store's managers to pay a royalty rate that will produce that profit margin.What royalty per pack would permit the store to earn a 10% profit margin on course packs,other things held constant?

A) $2.55
B) $2.84
C) $3.15
D) $3.50
E) $3.85

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free