Sweet Acacia 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 8,600 19,000 Selling price per unit $95 $78 Variable costs per unit 55 52 Fixed costs per unit 23 23 23 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 Sweet Acacia Company could sell 10,900 units of C next year at a price of $121; the variable costs per unit of C are $50. 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 Sweet Acacia Company should introduce product C next year. Why or why not? Company profit with Products A and B: : Units sold Sales revenue Variable costs Contribution margin Fixed costs Net income (loss) A $ B +A Total oducts A and C: A C Total Company profit with Products A and C: : Sweet Acacia Company should should not A C Total A introduce product C next year as the contribution margin $