Question

The financial analyst at a small video game company develops the expression

3.59g – 4960 to estimate the amount of profit per game sold (g) for a version upgrade of
one of its games. The company sets a goal of $75,000 profit on the game for the first
month of its roll out. How many games does the company need to sell in order to reach its
profit goal?
explain your work

Answer 1

Break-even point in units= 22,273

Explanation:

Giving the following information:

Contribution margin per game= $3.59

Fixed cost= $4,960

Desired profit= $75,000

To calculate the number of games to be sold, we need to use the following formula:

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (4,960 + 75,000) / 3.59

Break-even point in units= 22,273