Question
Can you please show how to answer a & b using excel? 1.Johnny Dang & Co. has designed three grillz (removable dental jewelry) models: Gold,
Can you please show how to answer a & b using excel?
1.Johnny Dang & Co. has designed three grillz (removable dental jewelry) models: Gold, Diamond, and Candy Paint. The prices of the models are: $1,200, $6,500, and $8,000, respectively. The variable costs for these models are: $475, 1900, and $2,300, respectively. The demand projected for each model for next year are: 10,500, 2,700, and 1,750 units.
Suppose they are now considering the addition of another product called the "World Series" priced at $5,000 with a variable cost of $1,500. Johnny Dang expects that they will sell 4,000 units of the new product next year. Fifty percent of the sales will be from cannibalization: 5% from the Gold, 25% from the Diamond, and 20% of the volume will be from the Candy Paint. The other 50% will come from market growth. The marketing costs for the World Series will be $3M and design costs will be $300,000.
a.Should Johnny Dang launch the World Series? Show your calculations.
b.Suppose that in year 2, sales of the Gold, Diamond, and Candy Paint increase by 10%, 15%, and 12%, respectively. If the World Series was launched in the first year, then it is expected that the demand in the second year will increase to 1,300 units. Marketing costs in the second year for the World Series will be $1.5M. Assuming that cannibalization rates remain the same, would your decision from part (a) change?
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