Heavenly Cookie Company has the following annual sales and costs for its current product line:

Heavenly is thinking of adding Mississippi Mud brownies to the product line. The ultra-rich brownies would sell for $0.99 a piece and cost $0.81 to produce. The forecasted brownie volume is 250,000 per year. Introduction of brownies, however, will reduce cookie sales by 250,000 with the following drop in sales per cookie: 130,000 in chocolate chip, 60,000 in snickerdoodle, 40,000 in peanut butter, 10,000 in lemon drop, and 10,000 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 productline?

Transcribed Image Text:

Chocolate Chip Sni Peanut Lemon Cream Filled 92,000 S0.59 $0.31 doodle Butter 130,000 $0.49 $0.15 Drop 78,000 $0.49 $0.22 240,000180,000 Price $0.49 $0.49 Cost $0.19 $0.17