Question
Max Leonard, vice president of Marketing for Dysk Computer, Inc., must decide whether to introduce a midpriced version of the firms DC6 personal computer product
Max Leonard, vice president of Marketing for Dysk Computer, Inc., must decide whether to introduce a midpriced version of the firms DC6 personal computer product line the DC6-X would sell for $4,100, with unit variable costs of $1,900. Projections made by an independent marketing research firm indicate that the DC6-X would achieve a sales volume of 500,000 units next year, in its first year of commercialization. 60% of the first years volume would come from competitors personal computers and market growth. However, a consumer research study indicates that 25% of the DCS-X sales volume would come from the higher-priced DC6-O personal computer, which sells for $5,900 (with unit variable costs of $2,300). Another 15% of the DC6-X sales volume would come from the economy-priced DC6-A personal computer, priced at $2,400 (with unit variable costs of $1,200). The DC6-O unit volume is expected to be 400,000 units next year, and the DC6-A is expected to achieve a 600,000 unit sales level. The fixed costs of launching the DC6-X have been forecasted to be $2 million during the first year of commercialization. Should Mr. Leonard add the DC6-X model to the line of personal computers? Why? or why not? Show your reasoning clearly
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