Question: Gill Bates is a famous computer programmer, and has just developed a state of the art gaming console, the HEXBOX 5 0 0 . These

Gill Bates is a famous computer programmer, and has just developed a state of the art gaming console, the HEXBOX 500. These boxes will be sold in retail stores at a price of $400.00 per unit. The retailers require a 20% markup on cost. Gill expects the manufacturing costs of his consoles to be $130.00 per unit. Packaging, distribution, and miscellaneous expenses are expected to be $60.00 per unit. To manufacture the consoles, Bates will need to use machinery and other assets that would cost $53 million every year. In an effort to increase consumer awareness, Bates has designed an advertising campaign (tagline: Vex your Ex with the HEX) that will cost $14 million. He spent $17 million last year on the Beware of the HEX project, which involved a simulated test market experiment to study consumer acceptance of the console. He has decided that his salespeople will receive a commission of 10%. Salaries and other expenses are expected to total $11 million.
The size of the gaming console market is expected to be 10m units this year.

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