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Brand X Sales (Units Sold) 1,400,000 1,391,000 1,390,000 1,380,000 1,377,700 F 1,370,000 1.360,000 1.352,900 li 1,350,000 1,544.000 1,340,000 1,330,000 1,320,000 2018 2019 2020 2021 (pected)
Brand X Sales (Units Sold) 1,400,000 1,391,000 1,390,000 1,380,000 1,377,700 F 1,370,000 1.360,000 1.352,900 li 1,350,000 1,544.000 1,340,000 1,330,000 1,320,000 2018 2019 2020 2021 (pected) Let's look back at the chart for Brand X's existing product sales. In 2021, brand X is planning to introduce a new product which is the sole reason why we expect a decrease in units sold of their existing product (from 1,391,000 units sold to 1,377,700) - i.e., cannibalization effect. Information we know about their current product: Retail Price: $9.99 where retailers take a 25% margin on selling price. Variable costs for Brand X: $5.19 per unit Retail Price: $9.99 where retailers take a 25% margin on selling price, Variable costs for Brand X: $5.19 per unit The new product will have a retail price of $11.29, with the same retail margin as specified above Variable cost of new product: $6.45 per unit a) If we expect to sell 750,000 units of the new product in 2021 what will be the profit for the new product in 2021 (don't forget to include cannibalization cost). (6 points) b) If the annual fixed cost for 2021 is expected to total $3,000,000, what is the total profit for Brand X - calculate profit for both products sold? (4 points)
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