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Crunchies is introducing Crunchies zesty. Crunchies Zesty will cannibalize the company’s existing brand – Crunchies Lite....

Crunchies is introducing Crunchies zesty. Crunchies Zesty will cannibalize the company’s existing brand – Crunchies Lite. Crunchies Lite Crunchies Zesty Unit Selling Price (case) $9.95 $11.25 Unit Variable Costs (case) $6.50 $7.50 The company expects to sell 50,000 cases of Crunchies Zest in year one. Of that amount, it is estimated that 20,000 cases will be diverted from Crunchies Lite, of which the company had expected to sell 70,000 cases.

A. Calculate the total contribution margin for Crunchies Lite, assuming that Crunchies Zesty was not introduced. Crunchies Lite CM: 50,000

B. Calculate the overall contribution Margin for Crunchies Lite, Assuming that the new brand is introduced as planned.

C. Calculate the total contribution margin for Crunchies Zesty.

D. Calculate the change in Crunchies’ total contribution margin due to the introduction of Crunchies Zesty.

E. Should Crunchies go ahead with the introduction? Why or why not?

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