Question
CHANGE IN TOTAL CONTRIBUTION. Kiran's Kandles is planning to introduce a new decorative candlethe Pillar 2, which will compete with the company's old, original decorative
CHANGE IN TOTAL CONTRIBUTION. Kiran's Kandles is planning to introduce a new decorative candlethe "Pillar 2," which will compete with the company's old, original decorative candle. Kiran's expects to earn a contribution margin of $13.27 per unit on the new Pillar 2 versus the $8.40 per unit margin on the older candle. Research suggests that the weighted contribution margin for the new Pillar 2 will be $ 7.73 per unit. A consultant expects Kiran's to sell 41,520 units of the new Pillar 2 candle, if it is introduced, but there will certainly be cannibalization of the old candle's sales. What will be the CHANGE IN TOTAL CONTRIBUTION (|Pric - Variable Costtimes Quantity) ACROSS BOTH PRODUCTS, if the new Pillar 2 is introduced and expected sales levels are achieved? Be sure that your answer accounts for the cannibalization of the old candle . (Rounding : dollar .)
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