Case Study
Mind Candy Ltd produces games and apps for computers and mobile devices. Its most successful game was Moshi Monsters. The game was aimed at young teenagers and was a global hit, with 80 million users in 2012.
In 2013, Mind Candy made large losses as sales revenue fell due to the falling popularity of its games. This was blamed on the short product life cycle of Moshi Monsters and increased competition in its market. As a result of these losses, Mind Candy reduced its workforce of software developers.
Mind Candy now needed to raise £1.2 million of extra finance. It required this finance to pay existing costs and fund the development of new apps such as Petlandia. Mind Candy believes Petlandia will allow it to return to organic growth. The app is free to download and allows players to design a virtual version of their own pet. This virtual pet can go on an adventure within the app. The adventure is then turned into a personalised storybook which can be purchased for £19.99.
Table 2 contains information about Mind Candy’s performance in 2013.
Sales revenue | £30 560 692 |
Gross profit | £22 190 385 |
Other operating expenses and interest | £25 044 332 |
(Source: adapted from https://beta.companieshouse.gov.uk/company/05119483/filing-history)
Table 2
Using the information in Table 2, calculate Mind Candy’s cost of sales. You are advised to show your workings.
|
Did this page help you?