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Answer all parts please Read Me, Inc. (RMI) is a wholesale distributor of textbooks through a variety of retail outlets. Presently, RMI is faced with
Answer all parts please
Read Me, Inc. (RMI) is a wholesale distributor of textbooks through a variety of retail outlets. Presently, RMI is faced with a decision as to whether it should obtain the distribution rights to an unreleased textbook. RMI estimates the cost of the book to be as follows: RMI's suggested retail price for the book is $20 per unit. The standard retailers' margin is 40 percent. 1. What is RMI's variable cost per unit? What is their total fixed cost? 2. How much revenue per unit will RMI receive? 3. What is RMI's unit contribution? What is their contribution margin? 4. How many units does RMI need to sell to break even at the suggested retail price of $20 ? How much revenue would this give them? 5. Suppose RMI estimates total future sales of this film to be 40,000 units. Should RMI buy the rights? 6. What if the retailer's margin is 50 percent? Should RMI buy the rights? (Assume the quantity of sales from \#5). What is RMI's new profit/loss? 7. RMI predicts they would sell 75,000 units if they increase advertising to $75,000. Should RMI buy the rights? (Assume that everything else stays the same as seen in the original data.) What is RMI's new profit/loss? 8. What if the royalties increased to $10,000 per 5,000 ? Should RMI buy the rights? (Assume the quantity of sales from \# #5 and that everything else stays the same as seen in the original data.) What is RMI's new profit/loss Step by Step Solution
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