Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Unicorn Enterprises produces two strategy games, Mystical Wars and Magical Dragons. The projected income for the coming year, segmented by product line is as follows:
Unicorn Enterprises produces two strategy games, Mystical Wars and Magical Dragons. The projected income for the coming year, segmented by product line is as follows:
Wars Rs | Dragons Rs | Total Rs | |
Sales | 500,000 | 800,000 | 1,300,000 |
Less: Variable costs | 230,000 | 460,000 | 690,000 |
Contribution margin | 270,000 | 340,000 | 610,000 |
Less: Direct fixed expenses | 120,000 | 180,000 | 300,000 |
Product margin | 150,000 | 160,000 | 310,000 |
Less: Common fixed expenses | 210,000 | ||
Operating income | 100,000 |
The selling prices are Rs. 10 for Mystical Wars and Rs. 20 for Magical Dragons. Required: 1) Compute the number of games of each kind that must be sold for Unicorn Enterprises to reach its break-even. 2) Compute the revenue that must be earned to produce a net income of 10% of sales revenue.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started