Reference no: EM131536346

Max Leonard, vice president of Marketing for Dysk Computer, Inc., must decide whether to introduce a midpriced version of the firm's DC6900 personal computer product line-the DC6900-X. The DC6900-X would sell for $3, 900, with unit variable costs of $1, 800. Projections made by an independent marketing research firm indicate that the DC6900-X would achieve a sales volume of 500,000 units next year, in its first year of commercialization. One-half of the first year's volume would come from competitors' personal computers and market growth. However, a consumer research study indicates that 30 percent of the DC6900-X sales volume would come from the higher-priced DC6900-Omcga personal computer, which sells for $5, 900 (with unit variable costs of $2, 200). Another 20 percent of the DC6900-X sales volume would come from the economy-priced DC6900-Alpha personal computer,  priced at $2, 500 (with unit variable costs of $ 1, 200). The DC6900-Omega unit volume is expected to be 400,000 units next year, and the DC6900-Alpha is expected to achieve a 600,000-unit sales level. The fixed costs of launching the DC6900-X have been forecast to be $2 million during the first year of commercialization. Should Mr. Leonard add the DC6900-X model to the line of personal computers? Why?