12) Taste Good Chocolates develops a new candy bar and plans to sell each bar fo

Question

12) Taste Good Chocolates develops a new candy bar and plans to sell each bar for $1. Taste Good predicts that 1 million candy bars will be sold in the first year if the new candy bar is produced and sold, and includes $1 million of incremental revenues in its capital budgeting analysis. A senior executive in the company believes that 1 mil¬lion candy bars will be sold, but lowers the estimate of incremental revenue to $700,000. What would explain this change?
a. excessive marketing costs to sell the 1 million candy bars
b. a lower discount rate
c. cannibalization of 300,000 of Taste Good Chocolates’ other candy bars
d. a higher selling price for the new candy bars

Explanation / Answer

C Introduction of a new bar will cause a reduction in sales of the old bars as some people will switch.

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.