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Wildhorse 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		9,400		19,500
Selling price per unit		$97		$80
Variable costs per unit		54		50
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 WildhorseCompany could sell 9,850 units of C next year at a price of $123; the variable costs per unit of C are $46. 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 years results to be the same as this years. Determine whether Wildhorse Company should introduce product C next year. Why or why not?

Company profit with Products A and B:
		A		B		Total
select an item Net income (loss)Units soldFixed costsContribution marginSales revenueVariable costs		enter a number of units		enter a number of units
select an item Sales revenueNet income (loss)Contribution marginVariable costsFixed costsUnits sold		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select between addition and deduction LessAdd: select an item Fixed costsUnits soldVariable costsSales revenueNet income (loss)Contribution margin		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a summarizing line for the first part Contribution marginUnits soldVariable costsNet income (loss)Fixed costsSales revenue		$enter a total amount for the first part		$enter a total amount for the first part		enter a total amount for the first part
select between addition and deduction AddLess: select an item Net income (loss)Fixed costsContribution marginSales revenueUnits soldVariable costs						enter a dollar amount
select a closing name for this statement Units soldSales revenueFixed costsVariable costsContribution marginNet income (loss)						$enter a total net income or loss amount

Company profit with Products A and C:
		A		C		Total
select an item Variable costsContribution marginFixed costsUnits soldSales revenueNet income (loss)		enter a number of units		enter a number of units
select an item Units soldFixed costsSales revenueNet income (loss)Variable costsContribution margin		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select between addition and deduction AddLess: select an item Contribution marginNet income (loss)Sales revenueFixed costsVariable costsUnits sold		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a summarizing line for the first part Sales revenueNet income (loss)Units soldContribution marginVariable costsFixed costs		$enter a total amount for the first part		$enter a total amount for the first part		enter a total amount for the first part
select between addition and deduction AddLess: select an item Net income (loss)Variable costsSales revenueUnits soldContribution marginFixed costs						enter a dollar amount
select a closing name for this statement Fixed costsContribution marginNet income (loss)Sales revenueVariable costsUnits sold						$enter a total net income or loss amount

Wildhorse Company select an option shouldshould not introduce product C next year as the contribution margin select an option increaseddecreased.

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