Question 3 Hoot Washington is the newly elected leader of the Republican Party. Media Publishers is negotiating to publish Hoot's Manifesto, a new book that promises to be an instant best seller. The fixed costs of producing and marketing the book will be R500 000. The variable costs of producing and marketing will be R40 per copy sold. These costs are before any payment to Hoot. Hoot negotiates an up-front payment of R3 million, plus a 15% royalty rate on the net sales price of each book. The net sales price is the listed bookstore price of R300, minus the margin paid to the bookstore to sell the book. The normal bookstore margin of 30% of the listed bookstore price is expected to apply. Required: 3.1 Prepare a CVP graph for Media Publishers. 3.2 3.3 How many copies must Media Publishers sell to: a. b. Breakeven? Earn a target operating income of R2 million? Examine the sensitivity of the breakeven point on the following changes: a. b. C. Decreasing the normal bookstore margin to 20% of the listed bookstore price of R300. Increasing the listed bookstore price to R400 while keeping the bookstore margin at 30%. Comment on the results. Page break-