Question

Question number 6 I need help

Answer 1

6. a)

total fixed costs = $600,000

product mix:

1 Diablo: 2 Call of Duty: 3 Sekiro: 4 Starcraft II

Contribution margin per unit:

• Diablo = $55 - $22 = $33
• Call of Duty = $48 - 17 = $31
• Sekiro = $33 - $12 = $21
• Starcraft = $22 - $11 = $11

Contribution margin per product mix = $33 + (2 x $31)) + (3 x $21) + (4 x $11) = $172

break even number (in product mix) = $600,000 / $172 = 3,488.37 ≈ 3,489 product mixes

6.b)

• Diablo = 3,489 games
• Call of Duty = 3,489 x 2 = 6,978 games
• Sekiro = 3,489 x 3 = 10,467 games
• Starcraft = 3,489 x 4 = 13,956 games