Controller at ABC Company is considering a project to introduce a new product called the Kate in to a market where it presently sells its signature product, the Sabre. There are no plans to eliminate the Sabre from the companys line of products. The cost of test marketing the Kate was $130,000. Selling the Kate in the same market as the Sabre is expected to lead to a reduction of net revenue of $125,000 from the decline of Sabre sales. The project will be also allocated $100,000 of corporate overhead.

What is the opportunity cost related to the launch of the new product?

1.$255,000

2.$230,000

3.$225,000

4.$125,000

5.$355,000