SOLUTION: A leading manufacturer of video games is about to introduce four new games. The accompanying table summarizes price and cost data, Combined fixed costs equal $600,000. A marketing

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Question 1163859: A leading manufacturer of video games is about to introduce four new games. The accompanying table
summarizes price and cost data, Combined fixed costs equal $600,000. A marketing research study predicts that
for each unit sold of Diablo, 2 units of Call of Duty: Modern Warfare, 3 units of Sekiro and 4 units of Starcraft II
will be sold.
Games
Diablo Call of Duty Sekiro Starcraft II
Selling Price (in dollars) 55 48 33 22
Variable cost/unit (in dollars) 22 17 12 11
a) How many product mix units must be sold to break even?
Answer by solver91311(24713)   (Show Source): You can put this solution on YOUR website!


The first thing is that you must assume that every game produced will be sold. Let represent the number of units of Diablo produced and sold. Then is the number of COD, is the number of Sekiro, and is the number of Starcraft.

Then the variable cost is:



Then the total production cost is:



The revenue function is:



The profit function is:



Break even means zero profit. So solve



to find the number of unit mix units that must be sold to break even given that no unsold units were produced

John

My calculator said it, I believe it, that settles it
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