Erosion costs Fat Tire Bicycle Company currently sells 35,000 bicycles per year. The current bike...
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Erosion costs Fat Tire Bicycle Company currently sells 35,000 bicycles per year. The current bike is a standard baloon-dire bike selling for $110, with a production and shipping cost of S30. The company is thinking of introducing an off-road bike with a projected selling price of $400 and a production and shipping cost of $250. The projected annual sales for the off-road bike are 14,000. The company will lose sales in fat-tre bikes of 7,500 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 bke? What is the erosion cost from the new bike? (Round to the nearest collar
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