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

question 5

Multiple Choice

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, VR, per pack to professors plus other variable costs of VO = $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

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Definitions:

Population Variances

Statistical measures that quantify the degree to which individuals in a population differ from the population mean.

Independent Samples

Sets of data collected from distinct, non-overlapping populations for comparative analysis in statistical studies.

Student T-distributed

A statistical distribution applied to predict population characteristics, suitable for scenarios with a limited sample size or when the population's variance remains undisclosed.

Sample Variance

A measure of the dispersion or variability within a sample data set, representing the average of the squared differences from the mean.