Chapter 21 Cost-Volume-Profit Analysis 1071 CP 21-4 Break-even analysis Somerset Inc. has finished a new video game, Snowboard Challenge. Management is now Tways to increase the profitability of this new offering: Ways to increase the profitability of this new offering: James: I think we need to think of some way to increase our profitabilty. Do you hav Thomas: Well, I think the be James: How aggressive? Thomas: If we drop the price to $60 per unit and maintain our advertising budget at $15,000,000, I think we will generate total sales of 2,000,000 units. James: I think that's the wrong way to go. You're giving up too much on price. Instead, I think we need to follow an aggressive advertising strategy. Thomas: How aggressive? James: If we increase our advertising to a total of $25,000,000, we should be able to increase sales volume to 1,400,000 units without any change in price. Thomas: I don't think that's reasonable. We'll never cover the increased advertising costs. Which strategy is best: Do nothing, follow the advice of Thomas Seymour, or follow James Hamilton's strategy