1. Hair Zone manufactures a brand of hair styling gel. It is considering adding a modified version of the producta foam that provides stronger hold. Hair Zones variable costs and prices to wholesalers are:

	Current hair gel	New foam product
Unit selling price	5.00	6.50
Unit variable costs	2.70	3.50

Hair Zone expects to sell 1 million units of the new styling foam in the first year after introduction, but it expects that 50% of those sales will come from buyers who normally purchase Hair Zones styling gel. Hair Zone estimates that it would sell 1.5 million units of the gel if it did not introduce the foam. If the fixed cost of launching the new foam will be $100,000 during the first year, should Hair Zone add the new product to its line? Why or why not?