The product of ABC company sells for Rs. 30 each having a variable cost of Rs. 22
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Question:
The product of ABC company sells for Rs. 30 each having a variable cost of Rs. 22 per unit. The fixed costs are Rs. 600.000 and the company sells 200,000 units of this product per annum. The royalty payment of Rs. 8 per unit is also paid along with Rs. 14, the other variable costs per unit. The company believes that it should earn a profit margin of 10% on sales, and they want to pay a royalty rate that will produce this profit margin.
What royalty per unit would permit the store to earn a 10% profit margin on sales, other things held constant?
Related Book For
Financial and Managerial Accounting
ISBN: 978-1285078571
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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