The cost of introducing the products in selected geographic areas for gauging consumer response is $150K. If the company decides to introduce the product this way, it would need to see the responses to the products before they decide to launch the product line nationally. The probability of a favorable response in the selected geographical areas is estimated at O.60. La Comida can also decide not to go for the launching in the product in selected geographical areas and go ahead with the nationwide launch or not. If La Comida Foods decides to go full-blast in launching the products nationally and are a success, the company estimates that they will gain an annual income of $1.6 million. If the products are not a hit, the company will realize losses to the tune of $700K. La Comida estimates the probability of success for the sauces and marinades to be 0.50, if these are introduced without gauging consumer response.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The cost of introducing the products in selected geographic areas for gauging consumer response is $150K. If the
company decides to introduce the product this way, it would need to see the responses to the products before they
decide to launch the product line nationally. The probability of a favorable response in the selected geographical areas is
estimated at O.60.
La Comida can also decide not to go for the launching in the product in selected geographical areas and go ahead with
the nationwide launch or not. If La Comida Foods decides to go full-blast in launching the products nationally and are a
success, the company estimates that they will gain an annual income of $1.6 million. If the products are not a hit, the
company will realize losses to the tune of $700K. La Comida estimates the probability of success for the sauces and
marinades to be 0.50, if these are introduced without gauging consumer response.
Transcribed Image Text:The cost of introducing the products in selected geographic areas for gauging consumer response is $150K. If the company decides to introduce the product this way, it would need to see the responses to the products before they decide to launch the product line nationally. The probability of a favorable response in the selected geographical areas is estimated at O.60. La Comida can also decide not to go for the launching in the product in selected geographical areas and go ahead with the nationwide launch or not. If La Comida Foods decides to go full-blast in launching the products nationally and are a success, the company estimates that they will gain an annual income of $1.6 million. If the products are not a hit, the company will realize losses to the tune of $700K. La Comida estimates the probability of success for the sauces and marinades to be 0.50, if these are introduced without gauging consumer response.
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