Play It Co. Ltd. is a top selling electronic games producer. Play It is about to release version 5.0 of its game. It divides its customers into two groups: new customers and upgrade customers (those who previously purchased Play It 1-2-3, 4.0 or earlier versions). Although the same physical product is provided to each customer group, sizable differences exist in selling prices and variable marketing costs. New Customers Upgrade Customers $ $ $ $ Selling price 210 120 Less Variable costs: Manufacturing 25 25 Marketing 65 90 15 40 Contribution margin 120 80 The fixed costs of Play It are $1,400,000. The planned sales mix in units is 60% new customers and 40% upgrade customers. Required:

b) If the sales mix is attained, what is the operating income when 20,000 units are sold?

c) how many units in total must be made in order to achieve a 10% profit margin on sales?