Digital Media Inc. manufactures game systems. Digital Media has decided to create and market a new system with wireless controls and excellent video graphics Digital Media's managers are thinking of calling this system the Yew. Based on past experience, they expect the total life cycle of the Yew to be four years, with the design phase taking about a year. They budget the following costs for the Yew (Click the icon to view the budget.) Required Requirement 1. Suppose the managers at Digital Media price the Yew game system at $86 per unit. How many units do they need to sell to break even? (Round your answer up to the nearest whole unit) Digital Media will need units to break even Budget Year 1 Year 1 Years 2-4 Years 2-4 Years 2-4 R&D costs Design costs Production Marketing and distribution Customer service Print S Total fixed costs over four years 7,140,000 1,720,000 20,200,000 6,150,000 2,500,000 Done Variable cost per unit $34 per unit 12 per unit I x ew to b sell to b Required 1. Suppose the managers at Digital Media price the Yew game system at $86 per unit. How many units do they need to sell to break even? 2. The managers at Digital Media are thinking of two alternative pricing strategies. a. Sell the Yew at $86 each from the outset. At this price, they expect to sell 1,680,000 units over its life cycle. b. Boost the selling price of the Yew in year 2 when it first comes out to $101 per unit. At this price, they expect to sell 1,060,000 units in year 2. In years 3 and 4, drop the price to $86 per unit. The managers expect to sell 315,000 units in years 3 and 4 (245,000 in year 3 and 70,000 in year 4). Which pricing strategy is recommended? Explain. 3. What other factors should Digital Media consider in choosing its pricing strategy? K