Assume That Microsoft and Sony Both Plan to Introduce a New

question 18

Essay

Assume that Microsoft and Sony both plan to introduce a new hand-held video game. Microsoft plans to use a heavily automated production process to produce its product while Sony plans to use a labor-intensive production process. The following revenue and cost relationships are provided:
Required:
(a) Compute the contribution margin per unit for each company.
(b) Prepare a contribution income statement for each company assuming each company sells 8,000 units.
(c) Compute each firm's net income if the number of units sold increases by 10%.
(d) Which firm will have more stable profits when sales change? Why?

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Definitions:

Placement

The process of assigning a person to a specific job or position suitable for their skills, qualifications, or preferences.

Line Managers

Managers who have direct responsibility over a particular unit or department within an organization, including the supervision of employees and the achievement of operational targets.

Placement Processes

The methods and strategies used to assign individuals to appropriate jobs or roles within an organization.

Discrimination Suit

Legal action taken against an employer or organization accused of unjust treatment of employees based on race, gender, age, disability, or other protected categories.