Current Attempt in Progress Pharoah Company operates a small factory in which it manufactures two products: A and B. Production and sales results for this year were as follows: A B Units sold 9,200 18,300 Selling price per unit $94 $79 Variable costs per unit 55 49 Fixed costs per unit 21 21 For purposes of simplicity, the firm averages total fixed costs over the total number of units of A and B produced and sold. The research department has developed a new product (C) as a replacement for product B. Market studies show that Pharoah Company could sell 10,400 units of C next year at a price of $121; the variable costs per unit of C are $48. The introduction of product C will lead to a 10% increase in demand for product A and discontinuation of product B. If the company does not introduce the new product, it expects next year's results to be the same as this year's. Determine whether Pharoah Company should introduce product C next year. Why or why not? Company profit with Products A and B: A $ $ $ B $ $ Total Company profit with Products A and C: A : $ $ $ $ C Pharoah Company introduce product C next year as the contribution margin $ $ Total