Somerset Inc has finished a new video game, Snowboard Challenge. Management is now considering it's marketing strategies.

The following information is available:

Anticipated Sales price per unit .$80

Variable cost per until$35

Anticipated volume.1,000,0000

Production Costs.$20,000,000

Anticipated advertising ..$15,000,000

Two managers have different ideas on ways to increase the profitability.

Jane suggests dropping the price to $60 per unit and maintain our advertising budget at $15,000,000. She thinks they will generate total sales of 2,000,000 units

Sara suggests increasing out advertising budget to $25,000,000 she thinks sales will increase to 1,400,000 without changing the price

Which Strategy is best: Do nothing? Following Jane? Follow Sara?

Hint: Revenue - Variable Cost - Fixed Cost

question is

1. Determine the break-even sales (in units) using the original information?

2. Determine the break-even sales (in units) for using the information advice from Jane?

3. Determine the break-even sales (in units) for using the information advice from Sara?

4. Which Strategy is best for Somerset to increase profitablity? and why ?