Erosion costs. Heavenly Cookie Company reports the following annual sales and costs for its current...
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Erosion costs. Heavenly Cookie Company reports the following annual sales and costs for its current product line Volume Price 255,000 50.7 205,000 50 47 83,000 50.48 50.2 Filled 98,000 0 54 Heavenly is thinking of adding Mississippi Mud brownies to the product line. The ultra-rich brownies wouild sell for $0.95 a piece and cost $0.70 to produce. The forecasted brownie volume is 224,000 per year. Introduction of brownies, however, wil reduce cookie sales by 196,000, with the tollowing drops in sales per cookie: 112,000 in chocolate chip, 39,000 in snickerdoodie, 27,000 in peanut butter, 9,000 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)
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