Title:

Video Game Pricing

Objective:

Find out the apt pricing for the video game produced by the US Company
to be sold in Japan, India

Case Description:

1. US Video Game manufacturing company is permitted to produce 2.5

Lakhs units of video game per year.

2. At present manufacturing 2 lakhs units of the product at a fixed cost

of $ 22 Lakhs

3. The variable cost of production is $ 9 / Unit

4. The markup pricing for profit is about 10%

5. 10000 Units more for exports have to be produced for exports.

6. Cost of Freight and Customs duty is $ 1 + 50% of domestic price

Analysis:

Fixed Cost of Production/Unit = 2200000 / 210000 = Rs 10.47 / Unit

Variable Cost of Production/Unit = Rs. 9 / Unit

Rs. 19.47 / Unit Cost of Production

Total Cost of Production per Unit - $ 20

Domestic Price - $ 22

Freight Charge = $ 1

Total Cost = $ 20 + 1 + (1/2) * $ 20 = $ 31

Mark Up Pricing - 10%

Final Cost - 1.1 * 31 = $ 34.10

Conclusion:

The final cost of the Video Game product in $ Terms for the International
Market is $ 34.10.