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

$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

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