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$836,000(396,000+440,000) is the WRONG ANSWER! EasyFind, Inc. sells StraightShot golf balls for $23 per dozen, with a variable manufacturing cost of $14 per dozen. EasyFind
$836,000(396,000+440,000) is the WRONG ANSWER!
EasyFind, Inc. sells StraightShot golf balls for $23 per dozen, with a variable manufacturing cost of $14 per dozen. EasyFind is planning to introduce a lower priced ball, Duffer's Delite, that will sell for $14 per dozen with a variable manufacturing cost of $4 per dozen. The firm currently sells 50,800 StraightShot units per year and expects to sell 24,300 units of the new Duffer's Delight golf ball if it is introduced ( 1 unit = 12 golf balls packaged together). Management projects the fixed costs for launching Duffer's Delight golf balls to be $7,010. Ignoring fixed costs, what will be the total annual contribution from Straight Shot and Duffer's Delite if StraightShot sales decline to 44,000 due to cannibalization, assuming Duffer's Delite meets it sales expectations. CALCULATED VARIABLE canrate =0.280(28.0%)Step by Step Solution
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