Twyla Company operates a small factory in which it manufactures two products: C and D. Production and sales results for last year were as follows.

For purposes of simplicity, the firm averages total fixed costs over the total number of units of C and D produced and sold.
The research department has developed a new product (E) as a replacement for product D. Market studies show that Twyla Company could sell 10,000 units of E next year at a price of $115; the variable cost per unit of E is $40. The introduction of product E will lead to a 10% increase in demand for product C and discontinuation of product D. If the company does not introduce the new product, it expects next year€™s results to be the same as last year€™s.

Instructions
Should Twyla Company introduce product E next year? Explain why or why not. Show calculations to support yourdecision.

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Units sold Selling price per u Variable cost per unit Fixed cost per unit 9,000 $95 50 20,000 $75 40 nit