Reference no: EM132858220

Kellogg's, maker of? Pop-Tarts, recently introduced? Pop-Tarts Gone? Nutty! The new product includes flavors such as peanut butter and chocolate peanut butter. Although the new Gone? Nutty! product will reap a higher wholesale price for the company ?($1.30 per? eight-count package of the new product versus ?$1.15 per package for the original? product), it also comes with higher variable costs ?($ 0.65 per? eight-count package for the new product versus ?$0.30 per? eight-count package for the original? product). Assume the company expects to sell 6 million packages of? Pop-Tarts Gone? Nutty! in the first year after introduction but expects that 75 percent of those sales will come from buyers who would normally purchase existing? Pop-Tart flavors? (that is, cannibalized? sales). Assuming the sales of regular? Pop-Tarts are normally 320 million packages per year and that the company will incur an increase in fixed costs of ?$ 390,000 during the first year to launch Gone? Nutty!, will the new product be profitable for the? company?