Question
The LifeSaver I is priced at $47 and has unit variable costs of $28. The LifeSaver II will be priced at $44 and will carry
The LifeSaver I is priced at $47 and has unit variable costs of $28. The LifeSaver II will be priced at $44 and will carry unit variable costs of $22. First year LifeSaver II sales are projected at 375,000 units. The company had expected to sell 450,000 LifeSaver I alarms, without the introduction of LifeSaver II. While difficult to estimate, the company believes that about 200,000 LifeSaver I's will be cannibalized by the introduction of the LifeSaver II. Calculate the projected 2013 total contribution margin for both LifeSaver I and LifeSaver II.
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