Cool Comfort currently sells 300 Class A spas, 450 Class C spas, and 200 deluxe

Question

Cool Comfort currently sells 300 Class A spas, 450 Class C spas, and 200 deluxe model spas each year. The firm is considering adding a mid-class spa and expects that if it does it can sell 375 of them. However, if the new spa is added, Class A sales are expected to decline to 225 units while the Class C sales are expected to decline to 200. The sales of the deluxe model will not be affected. Class A spas sell for an average of $12,000 each. Class C spas are priced at $6,000 and the deluxe model sells for $17,000 each. The new mid-range spa will sell for $8,000. What is the value of the erosion?<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Question 10 options:

Explanation / Answer

$2,400,000

$2,400,000

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