Signed a revenue- sharing contract

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Topgun Records has signed a revenue- sharing contract with a movie studio for CDs. Each CD costs the studio $2 to produce. The CD will be sold to Topgun for $3. Topgun in turn prices a CD at $15 and forecasts demand to be normally distributed, with a mean of 5,000 and standard deviation of 2,000. Any unsold CDs are discounted to $1, and all sell at this price. Topgun will share 35 percent of the revenue with the studio, keeping 65 percent for itself.

a- How many CDs should Topgun order?

b- How many CDs does Topgun expect to sell at a discount?

c- What is the profit that Topgun expects to make?

d- What is the profit that the studio expects to make?

Reference no: EM131279905

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