Monster Inc. markets personal computer games through a variety of retail outlets. Presently, Monster is faced with a decision as to whether it should obtain the distribution rights to a new technology for personal computer gamers The new game consists of the Daytona 500 game CD, driver seat pad, and control unit with cable (one of each is required per computer to play the game).

The retailers margin will be 20%. Other data available are as follows:

Hot Stuff Daytona 500 Software License (per year).......................................$200,000

Annual interest payments.................................................................................. $50,000

Cost of package design (per year) .................................................................. $150,000

Annual Advertising and promotion.......................................................................... $20

Royalties for Daytona 500 Game (per CD)............................................................ $10

Control Unit and Cable (per unit)................................................................................ $5

Material & Labor for Seat Pad (per pad).......................... $150

The suggested retail price is $824

Answer the following questions:

1. What is the price at which Monster must sell to the retailers?
2. What is VCIs unit contribution?
3. What is the break-even point in units?

MUST SHOW WORK FOR CREDIT.