Southwest U's campus book store sells course packs for $14 each. The variable cost per pack is $12, and at current annual sales

Question

3 years ago

15

of 49,000 packs, the store earns $75,000 before taxes on course packs. How much are the fixed costs of producing the course packs?

1 answer:

Mumz [18] · Answer 1 · 2022-03-01T04:19:49+03:00

Answer:

$23,000

Explanation:

current annual sales = 49,000 packs

Selling price of course packs = $14 each

variable cost per pack = $12

Earnings = $75,000

Contribution:

= current annual sales × (Selling price of course packs - variable cost per pack)

= 49,000 packs × ($14 - $12)

= 49,000 packs × $2

= $98,000

Fixed costs of producing the course packs:

= Contribution - Earnings

= $98,000 - $75,000

= $23,000