JBLEMS

$-25$ Revenue tracing, sales returns. Celebrity Posters sells its lines of posters of high$-$profile sporting celebrities to major sporting stores. Celebrity hires separate photographers for each of five sports. Each photographer is paid a percentage of the net revenues from the sale of the company's posters. Each poster is sold to a sporting store for $$12.$ Prior to the current year, each sporting store reported to Celebrity Posters only a total sales return amount. Posters returned to a sporting store were not resold and were disposed of at no value. Several photographers complained that they were disadvantaged by Celebrity Posters' not knowing the actual sales return percentage by individual sport. The hockey photographer claimed his photos were classics and that his sales return percentage "had to be trivial." He made derogatory comments about "the predictability of the basketball poster line" and claimed Celebrity Posters should use him to take both the hockey and basketball photos next year. He argued that the wrestling photos "looked as fake as the sport itself, if you could even call it a sport."

Summary information for $19\_7$ is:

$\backslash$table$[[$Sport$,$Gross Unit Sales,Actual Unit Returns,$\backslash$table$[[$Photographer Royalty$],[$Percentage$]]],[$Basketball$,32,000,1,600,18],[$Football$,25,000,3,000,20],[$Hockey$,20,000,5,000,14],[$Tennis$,12,000,1,200,12],[$Wrestling$,11,000,2,200,12]]$

REQUTRED

What is the unit sales return percentage for $($a$)$ the average for all five sports in $19-7$ and $($b$)$ each individual sport?

Compute the $19\_7$ payment to the photographer of each sporting line of posters $($a$)$ using the average return percentage for all five sports and $($b$)$ using the actual return percentage for each sport. Comment on your results.

Why might Celebrity Posters have used the average return percentage approach in prior years?