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2. BSTV manufactures high definition TVs. They are considering adding a fourth model to their current product line. The current line consists of the following
2. BSTV manufactures high definition TVs. They are considering adding a fourth model to their current product line. The current line consists of the following models: Model Selling Price Variable Cost Demand per year BS 1 $2600 $2000 10000 units BS X $4300 $3000 7500 units Full BS $5800 $4200 5000 units The proposed model, the Total BS, would have a selling price of $6600, a variable cost of $4600, and expected sales of 3000 units. In addition, the company will incur an additional $1.0 million in fixed costs to adapt the current production line to the new model. However, the expectation is that adding the Total BS will cannibalize the other units' sales. The BS 1, at the bottom of the line, should not be affected. Sales for the BS X are expected to decrease by 15-20%, while sales of the Full BS will drop 30%- 40%. Should they launch the Total BS? Why or Why not
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