DigiCom is a new company trying to take market share away from Apple's IPodin the MP3 player market. They are offering the 8gb Lame for $50 each, and the 16gb Lame Plus for $100. Their variable costs are $40 for each Lame and $30 for each Lame Plus. and in their first quarter they sold 36,000 units of Lame and 12,000 units of Lame Plus. Their fixed costs total $300,00. (check fig: VC/unit = 37.50)

a. Find the break-even point in terms of total units sold. At their current sales mix, how many units of Lame and how many units of Lame plus would this be?

b. They are targeting a profit of $500,000 for the year to make a dent in Apple's market share. How many units will they have to sell to achieve that goal?

Answer rating: 100% (QA)

There seems to be a slight discrepancy in the variable costs provided Heres the analysis considering both possibilities Scenario 1 Variable Cost per U... View the full answer