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:

		A		B
Units sold		9,200		18,300
Selling price per unit		$94		$79
Variable costs per unit		55		49
Fixed costs per unit		21		21

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 10,400 units of C next year at a price of $121; the variable costs per unit of C are $48. 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 years results to be the same as this years. Determine whether Straus Company should introduce product C next year. Why or why not?

Company profit with Products A and B: A B Total Company profit with Products A and C: A Total $ $ Straus Company introduce product C next year as the contribution margin