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Sierra Nevada mountain gear sells 1 million 1-person tents per year at $261 each. Production and distribution costs $88 per tent. They are considering producing
Sierra Nevada mountain gear sells 1 million 1-person tents per year at $261 each. Production and distribution costs $88 per tent. They are considering producing a 2-person tent that will cost $218 to produce and distribute. Then believe they can sell 600,000 2-person tents per year at a price of $417 each. If they introduce the 2-person tent, they estimate that sales of the 1-person tents will decline by 200,000 units per year. What is the annual erosion cost from the 2-person tent?
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