Question 2 ( 20 points) Judy Brown, marketing manager for Midwer Sporting Equipment (MSE). Ite., must decide whether to introduce a mid-priced version of the firm's Cy wlone line of high-performance recreational bicycles next year. The new model (C330) has a unit variable cost of $140, and will be sold to retailers at a price of $320. Projections made by the product development team indicate that, if introduced C.330 will achieve a sales: volume of 70.000 units next year, its first year of commercialization. Forty percent (40\%) of the C-330's first year's sales volume is expected to conie from competitors' products and market growth, and the remaining sixty percent (60%) is expected to come from two models currently sold by MSE - the C-220 and C440. Seventy percent of the cannibalized volume will come from the higher-priced C 440 model. Which has a unit variable cost of $250 and is sold to retailers for $540. The remaining thirty percent of cannibalized volume will come from the economy-priced C 220 model, which is sold to retailers for $210 and has a unit variable cost of $90. If C330 is not introduced, sales of the existing models next year are expected to be 45.000 units for C440 and 100,000 units for E-220. The fixed costs of launching C-330 have been forecasted to be $4,000,000. Answer the following, showing calculations. a) What is the cannibalization rate? (I pt) b) How many units of C-220 will be cannibalized? (3 pts) c) How many units of C440 will be cannibalized? (3 pts) d) How many incremental units of C330 will be sold? (3 pts) e) Should Ms. Brown add the C-330 model to the product line? Why? (10 pts)