Appy Daze Ltd has produced a s

Appy Daze Ltd has produced a smart phone application (app) that enables users to test their blood pressure by holding their phones to their ears. The company’s fixed costs, which include the development of the app, total £30,000. Users pay 50p to download the app, of which Appy Daze Ltd receives 35p after deducting the phone manufacturer’s commission. There are no variable costs other than the commission.

During 2013 it expects that potential maximum downloads could be 200,000.

(a) Calculate by formula the number of downloads that must be made for the company to break even. (Hint: use the formula Fixed Costs divided by Contribution per download.)

(b) Calculate by formula the company’s likely profit or loss if only 60,000 downloads are paid for. (Hint: use the formula Total contribution – Fixed costs)

(c) Calculate by formula the number of downloads that would have to be made for Appy Daze Ltd to make a profit of £50,000. (Hint: use the formula ([Fixed Costs + £50,000]/Contribution per download.)