Question 35 Straus Company operates a small factory in which it manufactures two products: A and B. Production and sales results for this year were as follows: Units sold Selling price per unit 8,700 18,700 $94 $76 Variable costs per unit 53 53 Fixed costs per unit 22 22 For purposes of simplicity, the firm averages total fixed costs over the total number of units of A and B produced and sold. The research department has developed a new product (C) as a replacement for product B. Market studies show that Straus Company could sell 10,050 units of C next year at a price of $118; the variable costs per unit of C are $49. The introduction of product C will lead to a 10% increase in demand for product A and discontinuation of product B. If the company does not introduce the new product, it expects next year's results to be the same as this year's. Determine whether Straus Company should introduce product C next year. Why or why not? Company profit with Products A and B: Total