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please help!! 2) TBSL currently has two primary bulk packaging options for selling direct to online customers, a box with 12 bars for $25 (rounded
please help!!
2) TBSL currently has two primary bulk packaging options for selling direct to online customers, a box with 12 bars for $25 (rounded for your convenience) and a case with 72 bars for $144. TBSL is considering adding a third package option, the Big Mix which includes 36 bars and is priced at $74. You have the following data: Package Box of 12 Case of 72 Big Mix Selling Price / unit $25 $144 $74 Variable Cost / unit $12 $72 $36 Demand last year 80,000 units 6,000 units 0 (new this year) The company will incur an additional $300,000 in fixed costs to adapt the current production line to make the new package size. The sales department and the marketing department have both been asked to produce a forecast for the upcoming year and have presented you the following information: Marketing: Sales for Big Mix = 30,000 units, 20% cannibalized from Box and 10% from the Case Sales: Sales for Big Mix = 40,000 units, 25% cannibalized from Box and 10% from the Case Of the 10 products TBSL has launched, Marketing's forecast has been more accurate than Sales' 6 times. Should TBSL add the Big Mix package? Justify and show your workStep by Step Solution
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