11.There is excitement in the air! The new UltraGuard flea collar is about to be
ID: 2643775 • Letter: 1
Question
11.There is excitement in the air! The new UltraGuard flea collar is about to be introduced to the market. The collar will feature enhanced protection, increased longevity and is environmentally friendly. It will be priced at $9.55 and has unit variable costs of $3.60. The company expects to sell 49,000 UltraGuard collars during the next six months. Some of the sales will come at the expense of the current product, the PetArmor collar, priced at $6.90 with variable costs of $2.85. The market analyst estimates that the UltraGuard collar will cannibalize 20,900 PetArmor collars during the introductory 6 month period.
Calculate the change in total contribution margin for the introductory six month period.
ANSWER IS 206,905
SHOW ME HOW TO SOLVE
Explanation / Answer
49,000 20,900
Selling Price 9.55 6.90
VAriable Cost 3.6 2.85
Contribution ---------- ---------
5.95 4.05
Units 49,000 20,900
Contribution in dollars 291550 84645
Cahange in total contribution 206,905 (291550-84645)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.