Kipmar Company produces a molded briefcase that is distributed to luggage stores. The following operating data for the current year has been accumulated for planning purposes.

Sales price		$80.00
Variable cost of goods sold		24.00
Variable selling expenses		21.20
Variable administrative expenses		3.00
Annual fixed expenses
Overhead		$7,800,000
Selling expenses		1,550,000
Administrative expenses		3,250,000

Kipmar can produce 1.5 million cases a year. The projected net income for the coming year is expected to be $1.8 million. Kipmar is subject to a 40% income tax rate. During the planning sessions, Kipmars managers have been reviewing costs and expenses. They estimate that the companys variable cost of goods sold will increase 15% in the coming year and that fixed administrative expenses will increase by $150,000. All other costs and expenses are expected to remain the same. Kipmar Companys managers are considering expanding the product line by introducing a leather briefcase. The new briefcase is expected to sell for $125; variable costs would amount to $75 per briefcase. If Kipmar introduces the leather briefcase, the company will incur an additional $390,000 per year in advertising costs. Kipmars marketing department has estimated that one new leather briefcase would be sold for every four molded briefcases. (c) What additional factors should Kipmars managers consider before deciding to introduce the new leather briefcase?