Question
Erosion costs. Heavenly Cookie Company reports the following annual sales and costs for its current product line: Click on this icon to download the data
Erosion costs. Heavenly Cookie Company reports the following annual sales and costs for its current product line: Click on this icon to download the data from this table Chocolate Chip Snicker- doodle Peanut Butter Lemon Drop Cream- Filled Volume 252,000 201,000 143,000 84,000 98,000 Price $0.40 $0.47 $0.52 $0.46 $0.53 Cost $0.20 $0.20 $0.19 $0.24 $0.33 Heavenly is thinking of adding Mississippi Mud brownies to the product line. The ultra-rich brownies would sell for $0.93 a piece and cost $0.70 to produce. The forecasted brownie volume is 223,000 per year. Introduction of brownies, however, will reduce cookie sales by 189,500, with the following drops in sales per cookie:111,000 in chocolate chip, 36,000 in snickerdoodle, 25,000 in peanut butter, 8,000 in lemon drop, and 9,500 in cream-filled. What is the erosion cost of introducing the brownies? What is the net change in annual margin if Mississippi Mud brownies are added to the product line? What is the erosion cost of introducing the brownies? $nothing(Round to the nearest dollar.)
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