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Molars Toothpaste is planning to introduce a new whitening toothpaste called Shine to supplement its current cavity prevention toothpaste named Prevent. While Molars is
Molars Toothpaste is planning to introduce a new whitening toothpaste called Shine to supplement its current cavity prevention toothpaste named Prevent. While Molars is confident in the success of Shine, the product manager knows that Shine will cannibalize 60% of Prevent's sales from last year so is concerned about the total profitability from the company's toothpaste product line. Here is selected data that the product manager has collected: Shine Prevent Manufacturer's $5.59 $4.89 suggested retail price Retailer purchase $4.50 $4.00 price Variable cost/unit $1.50 $1.00 Fixed costs per year $35,000 $30,000 Advertising $50,000 $10,000 Last year's sales 0 100,000 Unit sales expected 100,000 ? this year a. What is the total profit that the company should expect next year if they introduce Shine? b. Should Molar's introduce Shine? Justify your answer with data analysis.
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