Question
Max Leonard, vice president of Marketing for Dysk Computer, Inc, must decide whether to introduce a midpriced version of the firms DC6900 personal computer product
Max Leonard, vice president of Marketing for Dysk Computer, Inc, must decide whether to introduce a midpriced version of the firms DC6900 personal computer product line-the DC6900-X would sell for $3,900, with unit variable costs of $1,800. Projections made by an independent marketing research firm indicate that the DC6900-X would achieve a sales volume of 500,000 units next year, in its first year of commercialization. One-half of the first years volume would come from competitors personal computers and market growth. However, a consumer research study indicates that 30 percent of the DC6900-X sales volume would come from the higher priced DC6900-Omega personal computer, which sells for $5,900 (with unit variable costs of $2,200). Another 20 percent of the DC6900-Alpha personal computer, priced at $2,500 (with unit variable costs of $1,200). The DC6900-Omega unit volume is expected to be 400,000 units next year, and the DC6900-Alpha is expected to achieve a 600,000-unit sales level. The fixed costs of launching the DC6900-X have been forecast to be $2 million during the first year of commercialization. Should Mr. Leonard add the DC6900-X model to the line of personal computers? Why? Please show work
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started