TENALPINA TOOLS:

PRODUCT LINE EXPANSION CASE STUDY

Q. 1. TenAlpina is adding a new product line, which will add some new costs as well. Based on Giulia's estimates, and assuming that the volumes for piton production and sales do not change, how many wall hammers would TenAlpina Tools have to sell in order to have the same annual gross margin (in dollars) as it would have if only pitons were sold? That is, at what demand level for hammers would Guilia be indifferent (from a total profitability point of view) as to whether or not to add the new product line?