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You are a marketing manager for a line of widgets and are trying to decide...

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Accounting

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You are a marketing manager for a line of widgets and are trying to decide if you should launch a new product. Currently the margin on your existing product the widget X150 is $260. You know that you can sell the new product the widget X250 for $500. The variable costs for new products averages 60%. Last year you sold 10,000 units of the old X150. From previous experience you know that the CR (cannibalization rate) for the new product is 75% from existing products. You will sell 8,500 units of the new product. Based on this information would you launch the new product? a) No, the total contribution generated from both products will be lower. b) No, the CR is just too high for this new product to be viable. C) Yes, the contribution margin for the new product is higher. d) Yes, the total contribution generated by both products will be higher

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