Southeast U\'s campus book store sells course packs for $15.00each, the variable cost per pack is $12.00, fixed costs for thisoperation are $300,000, and annual sales are 95,000 packs. The unitvariable cost consists of a $3.00 royalty payment, VR , per pack toprofessors plus other variable costs of VO = $7.00. The royaltypayment is negotiable. The book store\'s directors believe that thestore should earn a profit margin of 10% on sales, and they wantthe store\'s managers to pay a royalty rate that will produce thatprofit margin. What royalty per pack would permit the store to earna 10% profit margin on course packs, other things heldconstant?

Answer rating: 100% (QA)

To calculate the royalty per pack that would permit the desired profit margin we need to consider th... View the full answer