Break-even analysis Aquarius Games Inc. has finished a new video game, Triathlon Challenge. Management is now considering its marketing strategies. The following information is available: Anticipated sales price per unit $75 Variable cost per unit $45 Anticipated sales volume in units 800,000 Production costs $9,000,000 Anticipated advertising costs $15,000,000 "The video game, packaging, and copying costs Three managers, Haley Chipana. Dan Gillespie, and Sally Towers had the following discussion of ways to increase the profitability of this new offering: Haley: I think we need to think of some way to increase our profitability. Do you have any ideas? Dan: Well, I think the best strategy would be to become aggressive on price. Haley: How aggressive? Dan: If we drop the price to $60 per unit and maintain our advertising budget at $15,000,000, I think we will generate sales of 2,000,000 units. Haley: I think that's the wrong way to go. You're giving too much up on price. Instead, I think we need to follow an aggressive advertising strategy. Dan: How aggressive? Haley: If we increase our advertising to a total of $20,000,000, we should be able to increase sales volume to 1,200,000 units without any change in price. LEOS Haley: If we increase our advertising to a total of $20,000,000, we should be able to increase sales volume to 1,200,000 units without any change in price. Dan: I don't think that's reasonable. We'll never cover the increased advertising costs. Sally: If we reduce the anticipated selling price by 10%, we can generate sales of 1,500,000 video games. Although it will increase the cost, we should reward our sales associates with a $3 sales commission for each unit sold. Also, let's find a way to reduce the production cost to $8,000,000 Which strategy is best: 1) Do nothing? 2) Follow the advice of Dan Gillespie? 3) Haley Chipana's strategy? 4) Or Sally Tower's strategy? Prepare each manager's contribution margin income statement below and SHOW ALL WORK. Then, explain which strategy is best. 1 of 2 (AA 5) Accounting Assignment #5 - Cost-Volume-Profit Chapter 11.3 - Case study ACCT 2700: Accounting Show your work Do Nothing Strategy Sales Variable Cost Contribution Margin Fixed Cost Income from Operations ELE Fixed Cost Income from Operations Show your work Dan's Strategy Sales Variable Cost Contribution Margin Fixed Cost Income from Operations Show your work Haley's Strategy Sales Variable Cost Contribution Margin Fixed Cost Income from Operations Show your work Sally's Strategy Sales Variable Cost Contribution Margin Fixed Cost Margin Fixed Cost Income from Operations Show your work Haley's Strategy Sales Variable Cost Contribution Margin Fixed Cost Income from Operations Show your work Sally's Strategy Sales Variable Cost Contribution Margin Fixed Cost Income from Operations Which strategy is best? Briefly Explain