Question: A manager is evaluating whether to introduce a new product line. The manager estimates the variable costs of each unit produced and sold at $6

A manager is evaluating whether to introduce a new product line. The manager estimates the variable costs of each unit produced and sold at $6 and the fixed costs per year at $59,600.

Under plan C, the manager forecast sales of 10,000 units for the first year if the selling price is set at $14 each. Assuming the same per unit variable costs and the fixed cost as shown above, what would be the total contribution to profits from this new product during the first year? Show all your step-by-step analysis and calculations below.

If, under plan D, the selling price is set at $12.50, the manager forecasts that first-year sales would increase to 15,000 units. Which pricing strategy, Plan C or Plan D, will result in greater total contribution to profits?

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