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QUESTION 3 10 points Save Answer Tharp Company operated a small factory in which it manufactures two products: C and D. Production and sales results
QUESTION 3 10 points Save Answer Tharp Company operated a small factory in which it manufactures two products: C and D. Production and sales results for last year were as follows; D Units sold Selling Price VC per unit FC per unit 9,000 $95 50 24 20,000 $75 40 24 For purpose of simplicity, the firm averages total fixed costs over the total number of units of C and D produced and sold. The research department has developed a new product E as a replacement for product D. Market studies show that Tharp Company could sell 10,000 units of E next year at a price of $115; the variable cost per unit of E is $45. The introduction of product E will lead to a 10% increase in demand for product C and the discontinuation of product D. If the company does net introduce the new product, it expects next year's results to be the same as last year's. Required: Should Tharp Company introduce the product E next year? Explain why or why not. Show your calculations clearly
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