Erosion costs. Heavenly Cookie Company reports the following annual sales and costs for its current product line: Click on this icon to download the data from this table Chocolate Snicker- Peanut Lemon Cream- Chip doodle Butter Drop Filled 254,000 $0.50 Volume 201,000 142,000 82,000 92,000 Price Cost $0.48 $0.54 $0.49 $0.54 $0.23 $0.19 $0.19 $0.25 $0.33 Heavenly is thinking of adding Mississippi Mud brownies to the product line. The ultra-rich brownies would sell for $0.90 a piece and cost $0.75 to produce. The forecasted brownie volume is 221,000 per year. Introduction of brownies, however, will reduce cookie sales by 193,000, with the following drops in sales per cookie: 110,000 in chocolate chip, 40,000 in snickerdoodle, 27,000 in peanut butter, 7,000 in lemon drop, and 9,000 in cream-filled. What is the erosion cost of introducing t brownies? What is the net change in annual margin if Mississippi Mud brownies are added to the product line? What is the erosion cost of introducing the brownies? (Round to the nearest dollar.) What is the net change in annual margin if Mississippi Mud brownies are added to the product line? (Round to the nearest dollar.) Should the brownies be adopted into the product line? (Select the best response.) O A. Do not add brownies to the product mix. O B. Add brownies to the product mix.
Erosion costs. Heavenly Cookie Company reports the following annual sales and costs for its current product line: Click on this icon to download the data from this table Chocolate Snicker- Peanut Lemon Cream- Chip doodle Butter Drop Filled 254,000 $0.50 Volume 201,000 142,000 82,000 92,000 Price Cost $0.48 $0.54 $0.49 $0.54 $0.23 $0.19 $0.19 $0.25 $0.33 Heavenly is thinking of adding Mississippi Mud brownies to the product line. The ultra-rich brownies would sell for $0.90 a piece and cost $0.75 to produce. The forecasted brownie volume is 221,000 per year. Introduction of brownies, however, will reduce cookie sales by 193,000, with the following drops in sales per cookie: 110,000 in chocolate chip, 40,000 in snickerdoodle, 27,000 in peanut butter, 7,000 in lemon drop, and 9,000 in cream-filled. What is the erosion cost of introducing t brownies? What is the net change in annual margin if Mississippi Mud brownies are added to the product line? What is the erosion cost of introducing the brownies? (Round to the nearest dollar.) What is the net change in annual margin if Mississippi Mud brownies are added to the product line? (Round to the nearest dollar.) Should the brownies be adopted into the product line? (Select the best response.) O A. Do not add brownies to the product mix. O B. Add brownies to the product mix.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Erosion costs. Heavenly Cookie Company reports the following annual sales and costs for its current product line:
Click on this icon D to download the data from this table
Chocolate
Snicker-
Peanut
Lemon
Cream-
Chip
doodle
Butter
Drop
Filled
Volume
254,000
201,000
142,000
82,000
92,000
$0.54
Price
$0.50
$0.48
$0.54
$0.49
Cost
$0.23
$0.19
$0.19
$0.25
$0.33
Heavenly is thinking of adding Mississippi Mud brownies to the product line. The ultra-rich brownies would sell for $0.90 a piece and cost $0.75 to produce. The
forecasted brownie volume is 221,000 per year. Introduction of brownies, however, will reduce cookie sales by 193,000, with the following drops in sales per cookie:
110,000 in chocolate chip, 40,000 in snickerdoodle, 27,000 in peanut butter, 7,000 in lemon drop, and 9,000 in cream-filled. What is the erosion cost of introducing the
brownies? What is the net change in annual margin if Mississippi Mud brownies are added to the product line?
What is the erosion cost of introducing the brownies?
$
(Round to the nearest dollar.)
What is the net change in annual margin if Mississippi Mud brownies are added to the product line?
$ (Round to the nearest dollar.)
Should the brownies be adopted into the product line? (Select the best response.)
O A. Do not add brownies to the product mix.
O B. Add brownies to the product mix.
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