Exercise 12-20 (similar to) Question Help Gamebug Inc. manufactures game systems. Gamebug has decided to create and market a new system with wireless controls and excellent video graphics. Gamebug'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 Gamebug price the Yew game system at $140 per unit. How many units do they need to sell to break even? (Round your answer up to the nearest whole unit.) Gamebug will need units to break even. i Budget - Variable cost per unit Year 1 R&D costs Total fixed costs over four years $ 6,610,000 1,420,000 19,620,000 Years 2-4 Design costs Production Marketing and distribution Customer service $58 per unit $9 per unit 5,240,000 3,000,000 - X Required 1. Suppose the managers at Gamebug price the Yew game system at $140 per unit. How many units do they need to sell to break even? 2. The managers at Gamebug are thinking of two alternative pricing strategies. a. Sell the Yew at $140 each from the outset. At this price, they expect to sell 1,480,000 units over its life cycle. b. Boost the selling price of the Yew in year 2 when it first comes out to $225 per unit. At this price, they expect to sell 104,000 units in year 2. In years 3 and 4, drop the price to $140 per unit. The managers expect to sell 1,140,000 units in years 3 and 4. Which pricing strategy is recommended? Explain. 3. What other factors should Gamebug consider in choosing its pricing strategy