Question: Sony is considering developing a new gaming console with the following financial details: Development Costs: $2 billion Production Costs per Unit: $250 Selling Price per

  • Sony is considering developing a new gaming console with the following financial details:
    • Development Costs: $2 billion
    • Production Costs per Unit: $250
    • Selling Price per Unit: $500
    • Estimated Annual Sales: 8 million units
    • Fixed Costs: $500 million annually
  • Requirements:
    1. Calculate the total annual revenue and production cost.
    2. Prepare a break-even analysis.
    3. Analyze the profit margin per unit and overall.
    4. Discuss the strategic importance of the new gaming console.
    5. Evaluate the market risks and competition.

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