2. a) i) b) ii) James McFadden intends to take a stand at a two-day software exhibition at the NEC in Birmingham. He will be selling the latest version of his computer football game, the previous versions of which have been hugely successful and the product commands a premium price of 200 for each game. He expects to sell 200 games over the two days. Although James designed the game, he subcontracts its manufacture and has negotiated a cost price of 120 for each game. He will have to pay the NEC a fee for renting a stand at the exhibition and the organisers have offered him three different options: 1) A flat fee of 6,000 for the duration of the exhibition; 2) A flat fee of 3,500 plus a commission amounting to 5% of his sales; 3) No fee; just a 15% commission on his sales. Required: For each of these three options calculate the profit he will make over the two days, his break-even point in terms of quantities and his margin of safety. Which of the three options would you advise James to take and why? iii) What arguments could you put forward to justify advising James to go for one of the options with a lower profit? Based on option 2) above (a flat fee of 3,500 plus a commission amounting to 5% of his sales), how many games would James need to sell to make a profit of 14,000? Calculate the break-even point and margin of safety at this level of sales