Reference no: EM131561454

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 75,000 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? Do not round your intermediate calculations. a. $1.88 b. $2.25 c. $2.50 d. $2.78 e. $2.00.