Q1.(Spoint) Levy Company operates a small factory in which it manufactures three products: B, C and D. Production and sales results for last year were as follows: B D Units sold 2,000 5,000 8,000 Selling price per unit $90 $100 $80 Variable costs per unit $60 55 50 Fixed costs allocated per unit $20 20 20 The research department has developed a new product (E) as a replacement for Product (D). Market studies show that Levy Company could sell 5,500 units of (E) next year at a price of $120; the variable costs per unit of (E) are $50. The introduction of product (E) will lead to a 10% increase in demand for product (C), 20% decrease in demand for product (B) discontinuation of product (D) and 10% increase in fixed cost per year. If the company does not introduce the new product, it expects next year's results to be the same as last year's. Instructions Should Levy Company introduce product (E) next year? Explain why or why not. Show calculations to support your decision