Question
Alpina Sports manufactures a line of sunglasses for skiing. Last year they sold: (1) 1432 pairs of the Ram glasses with a contribution per unit
Alpina Sports manufactures a line of sunglasses for skiing. Last year they sold: (1) 1432 pairs of the Ram glasses with a contribution per unit of $16.25 (2) 1781 pairs of the Swing glasses with a contribution per unit of $14.85; (3) 1733 pairs of the Overview glasses with a contribution per unit of $12.50.
Alpina Sports wants to add a fourth pair of glasses, the Testido, with a contribution per unit of $14.35. Marketing has forecasted that the Testido would sell 1640 pairs. If launched, 21% of Testidos sales will be new sales, 9% will be cannibalized from the Ram glasses, 32% will be cannibalized from the Swing glasses, and 38% will be cannibalized from the Overview glasses.
If Testido is introduced, what will be the incremental contribution?
$5,826.76
$5,545.25
$6,018.79
$5,281,15
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