Suppose that you are the marketing manager on a new product under development for launch into the skin cream market. The working brand name for your proposed new entry is Elora and your companys R&D department has developed three different versions of the product for your consideration. Elora A matches competitive performance. Elora B also matches competitive performance but has a single, important advantage versus competition (protection against UV rays the second most important attribute for the primarily female users of skin creams). Elora C is clearly superior on several attributes including ability to clean and soften the skin, fragrance, and ability to protect against UV rays. Elora B or C are the most appealing versions from the standpoint of achieving the brands marketing objective of being a solid number 2 or 3 in this already saturated market, but is either one viable or attractive financially?

Using the case and financial information provided below, create simple profit and loss statements for the three versions of Elora to help you decide which one to continue developing and testing for launch. Note that the volume estimates vary for each version of the product, reflecting the different demand expectations for each formula. Also please note that, like the key competitors, this product will be sold through retail stores, not directly to consumers. Therefore the price per case provided is what your company will charge retailers for a case (or 12 units) of the product, not the retail price that consumers will pay for each unit.

	Elora A	Elora B	Elora C
Estimated Total Annual Sales Volume (cases)	100,000	120,000	127,000
Estimated Price per case ($)	24.00	28.00	31.50
Total Fixed Costs ($)	750,000	750,000	750,000
Average Variable Cost per case ex. product costs($)	7.00	7.00	7.00
Average Variable Cost per case - product costs ($)	2.75	5.50	9.00
Total Average Variable Cost per case ($)	9.75	12.50	16.00
Marketing Support ($)	100,000	120,000	127,000

Record your profit and loss statement estimates in the following chart:

	Elora A	Elora B	Elora C
Sales Revenue ($)
Total Fixed Costs ($)
Total Variable Costs ($)	??
Expenses ($)
Net Profit ($)
Profit Margin (%)

QUESTION:

What are the Total Variable Costs ($) for Elora A?

		9.75
		1,700,000
		975,000