Hair Zone manufactures a brand of hair-styling gel.

Hair Zone manufactures a brand of hair-styling gel.

t is considering adding a modified version of the product—a foam that provides stronger hold. Hair
Zone’s variable costs and prices to wholesalers are:

	Current Hair Gel	New Foam Product
Unit selling price	2.00	2.25
Unit variable costs	0.85	1.25

Hair Zone expects to sell 1 million units of the new styling foam in the first year after introduction, but it expects that 60 percent of those sales will
come from buyers who normally purchase Hair Zone’s styling gel. Hair Zone estimates that it would sell 1.5 million units of the gel if it did not introduce
the foam. If the fixed cost of launching the new foam will be $100,000 during the first year, should Hair Zone add the new product to its line? Why or why
not?

Is this the question you were looking for? If so, place your order here to get started!