Erosion costs. Fat Tire Bicycle Company currently sells 37,000 bicycles per year. The current bike is a standard balloon-tire bike selling for $110, with a production and shipping cost of $25. The company is thinking of introducing an off-road bike with a projected selling price of $400 and a production and shipping cost of $225. The projected annual sales for the off-road bike are 14,000 . The company will lose sales in fat-tire bikes of 9,000 units per year if it introduces the new bike, however. What is the erosion cost from the new bike? Should Fat Tire start producing the off-road bike? What is the erosion cost from the new bike? $ (Round to the nearest dollar.)
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