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Question 2 (60 points) Acme Detergents Inc (ADD is deciding whether to introduce a new detergent, SuperBright. The cost of promotion and advertising and fixed

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Question 2 (60 points) Acme Detergents Inc (ADD is deciding whether to introduce a new detergent, SuperBright. The cost of promotion and advertising and fixed production costs for SuperBright is $6 million per year. R&D to develop SuperBright and modify machinery to produce it was $5M. The detergent has a retail shelf price of $4.50, which allows the retailer a 33% margin and ADI a 100% mark-up on variable costs (ADI sells directly to retailers). ADI is concerned about cannibalization of their existing detergent, SuperClean. SuperClean is produced on a $20 million machine. The machine had spare capacity that (with the modifications already mentioned) allows it to produce both products. Promotion and advertising costs for SuperClean are $10 million per year. Estimates are that 20% of SuperBright unit sales will come at the expense of lost SuperClean sales. SuperClean sells to retailers for $2.50 and variable costs are $1.50 per unit Part A (25 points): If ADI sells 7 million units of SuperBright what will be the incremental profit contributed by SuperBright Part B (25 Points) How many units of SuperBright must be sold for the introduction decision to lead to at least a breakeven for ADI? und shere of market

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