Target market= 20 million people App will sell for $3.99, this will be a one- time fee After 2 years we plan to have sold to 50% of our target market = 10 million people After 3 years we plan to have sold to 84% =16,800,000 people These are based off of the product life cycle, after 3 years we will have sold to everyone except the laggards With salaries we figure an average of $40,000 per year per person=40,000/12=3,334*8=$26,672 per month Fixed costs: Building=$3,000 per month Utilities= $500 per month Salaries= $26,672 per month (with 8 employees) Total fixed costs: $30,172 per month (year 1) We will add two employees in year two and two more in year three ($3,334 per month per person for salary) Therefore, total fixed cost in year 2 is $36,840 per month and year 3 is $43,508 per month Variable Costs: Start up costs: $45,000 (just in year 1) Production: $15,000/12= $1,250 per month (every year) To get our app into the Apple Store is $99 per year and Google Play store is $25 per year (pay full amount in January) Total Variable Cost= January of year 1=$46,374 (rest of year it is $1,250 per month) January of year 2 and 3= $1,374 (rest of year is $1,250 per month) Total Cost: Year 1 January = 30,172+46374=$76,546 (rest of year 30,172+1250= $31,422) Year 2 January= 36,840+1,374=$38,214 (rest of year 36,840+1,250=$38,090) Year 3 January=43,508+1,374=$44,882 (rest of year 43,508+1250=$44,758) Create a break even analysis based on the information above