1. Kool-Aid wants to expand its offering of liquid drink mixes with a new product launch. Currently, the line includes cherry and orange flavors. The new product will expand the franchise by adding a grape flavor. Privately, some Kool-Aid officials have mentioned their concerns about possible cannibalization of the other flavors. Based on 2020 figures, Kool-Aid managers currently project the following for 2021: Cherry flavor will sell 214,061,800 units at a unit selling price of $0.89 and a unit variable cost of $0.42; orange flavor will sell 132,993,470 units at a unit selling price of $0.75 and a unit variable cost of $0.35. However, if the grape flavor is introduced, Kool-Aid managers think the new product will sell 95,000,000 units in 2021 at a unit selling price of $0.85 and a unit variable cost of $0.47. However, initial estimates are that only 20% of the grape flavor unit sales will be new sales. Twenty percent will be from the cherry flavor and sixty percent will be from the orange flavor.

   (a) What is the expected TC for the cherry and orange flavors in 2021 if Kool-Aid does not introduce the grape flavor?

   		$188,651,388
   		$171,443,989
   		$153,806,434
   		$127,854,322