Model - 5,900 $ 2,500 Unit Variable Cost $ 1,800 $ 2,200 $...

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Model Selling Variable Unit UnitsSold Total Price Cost Contribution Contribution Model LX1 175.00 100.00 75.00 2,000.00 150,000.00 Model LX2 250.00 125.00 125.00 1,000.00 125,000.00 Model LX3 300.00 140.00 160.00 500.00 80,000.00 For the new Model : SP 375.00 VC 225.00 Unit C 150.00 Units Sold 300.00 TC 45,000.00 Less: Contribution from LX1 (15,000.00) Contribution from LX2 (37,500.00) Contribution from LX3 (48,000.00) Net effect on Contribution (55,500.00) Since, the net effect on contribution is negative, it is better not to produce the new model . DVD Selling Price Variable Cost Demand/Year Model per Unit per Unit (units) Model LX1 $175 $100 2,000 Model LX2 250 125 1,000 Model LX3 300 140 500 10% $1,800 $315,000 30% $700 $175,000 60% $200.00 $60,000 $300 x $375 = $112,500 Total $662.50 2. Solution DC6900-X DC6900- Omega DC6900- Alpha Total
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Sales Price per Unit $ 3,900 $
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Unformatted text preview: 5,900 $ 2,500 Unit Variable Cost $ 1,800 $ 2,200 $ 1,200 Unit Contribution $ 2,100 $ 3,700 $ 1,300 Case A (Do Not Introduce DC6900-X) Number of Units sold 400,000 600,00 0 Total Contribution $ - $1,480,000,00 0 $ 780,000,000 Total Fixed Costs $ - $ - $ - Net Profit $ - $1,480,000,00 0 $ 780,000,000 $2,260,000,0 00 Case B (Introduce DC6900-X) Number of Units sold (After Cannibalization effect) 500,000 250,000 500,00 0 Total Contribution $1,050,000,00 0 $ 925,000,000 $ 650,000,000 Total Fixed Costs $ 2,000,000 Net Profit $1,048,000,00 0 $ 925,000,000 $ 650,000,000 $2,623,000,0 00 Yes, Mr. Leonard should introduce DC6900-X as the Net Profit (after considering cannibalization effect) by introducing DC6900-X is higher than the Net Profit without introducing DC6900-X by $363,000,000. 3 . 4 . 5....
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Model - 5,900 $ 2,500 Unit Variable Cost $ 1,800 $ 2,200 $...

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