Heavenly is thinking of adding Mississippi Mud brownies to the product line. The ultra-rich brownies would sell for

$0.97

a piece and cost

$0.75

to produce. The forecasted brownie volume is

222,000

per year. Introduction of brownies, however, will reduce cookie sales by

191,500,

with the following drops in sales per cookie:

111,000

in chocolate chip,

36,000

in snickerdoodle,

26,000

in peanut butter,

9,000

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?

Chocolate Chip Snickerdoodle Peanut Butter Lemon Drop Cream-Filled Volume 254,000 205,000 144,000 84,000 98,000 Price (US$) 0.50 0.48 0.53 0.49 0.55 Cost (US$) 0.24 0.20 0.19 0.21 0.31

find erosion cost of introducing the brownies and find the net change in annual margin