Kirkland Video Games Inc. is developing a new video game. It is the most sophisticated game on the market. It sells the video game for $285 per copy. Variable costs to produce and sell the video game amount to $80 per copy. Fixed costs amount to $481,750. The company anticipates selling 410 copies of the game per month. The companys policy is to stop producing the video game as soon as a competitor comes out with a more sophisticated version.

I had also gotten the value of $394,010 by doing the following: Operating Income = Contribution - Fixed Cost = 875760-481750 =$394010 Which was also incorrect for me.

Thank you,

Question 5 Kirkland Video Games Inc. is developing a new video game. It is the most sophisticated game on the market. It sells the video game for $285 per copy. Variable costs to produce and sell the video game amount to $80 per copy. Fixed costs amount to $481,750. The company anticipates selling 410 copies of the game per month. The company's policy is to stop producing the video game as soon as a competitor comes out with a more sophisticated version. (a) Your answer is incorrect. Try again. Calculate the amount of operating income the company will earn if it takes 12 months for a competitor to produce a more sophisticated version of the video game. Operating Income 875760