7. A publisher sets the selling price of a book at F15.60 per copy. He pays royalty to the author as
follows: 2% of the selling price for the first 3,000 copies sold, 5% of the selling price for the next 3,000
copies sold and 15% of the selling price for the remaining copies sold.
If 11,550 copies of the book were sold, calculate:
a) the amount of royalty earned by the author.
b) the total profit made by the publisher, given that the production cost incurred is 168,000.
Also, find the profit percent made by the publisher.
Answers
Answer:
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Answer:
(A) (i) Rs 16,263 (ii) Rs 95,917 (B) Rs 13346.67
Step-by-step explanation:
Cost of 1 book = Rs 15.60
Number of books sold = 11,550
Find the total selling price:
Total Selling Price = 11550 x 15.60 = Rs 180,180
Find the royalty fee paid for the first 3000 books:
Selling Price = 3000 x 15.60 = Rs 46,800
Royalty Fee = 2% of Rs 46,800 = 0.02 x 46800 = Rs 936
Find the royalty fee paid for the next 3000 books:
Selling Price = 3000 x 15.60 = Rs 46,800
Royalty Fee = 5% of Rs 46,800 = 0.05 x 46800 = Rs 2340
Find the royalty fee paid for the remaining books:
Total books remaining = 11550 - 3000 - 3000 = 5550
Selling Price = 5550 x 15.60 = Rs 86,580
Royalty Fee = 15% of Rs 86,580 = 0.15 x 86580 = Rs 12987
Find the total royalty fee:
Total = 936 + 2340 + 12987 = Rs 16,263
Find the Profit:
Profit = Selling Price - Cost of production - Royalty Fee
Profit = 180,180 - 68,000 - 16,263 = Rs 95,917
Find the cost Price:
Cost Price = Selling Price - Profit
Cost Price = 180,180 - 95,917 = Rs 84,263
Find the profit Percentage:
Profit Percentage = Profit / Cost Price x 100
Profit Percentage = 96,917 / 84,263 x 100 = 115%
Find the VAT for one book:
VAT = 8%
Selling Price = 100 + 8 = 108%
108% = Rs 15.60
1% = 15.60 ÷ 108 = 13/90
8% = 13/90 x 8 = Rs 1.56
Find the VAT for 11550 books:
1 book = Rs 1.56
11550 books = 1.56 x 11550 = Rs 13346.67