Wargrin designs, develops and sells

Wargrin designs, develops and sells many PC games. Gamws have a short lifecycle lasting around three years only. Performance of the games is measured by reference to the profits made in each of the expected three years popularity. Wargrin accepts a net profits of 35% of sales as reasonable.Wargrin has developed a brand new game called Stealth and this has the following budgeted performance figures.The selling price of Stealth will be a constant $30 per game. Analysis of the costs show that at a volume of 10,000 units a total cost of $130,000 is expected. However at a volume of 14,000 units a total cost of $150,000 is expected. If volumes exceed 15,000 units the fixed costs will increase by 50%.Stealth's budgeted volumes are as follows:in addition, marketing costs for Stealth will be $60,000 in year one and $40,000 in year two. Design and development costs are all incurred before the game is launched and has cost $300,000 for Stealth. These costs are written off to the income statement as incurred (i.e. before year 1 above)