In the last year, Bakers Score's Donuts and sweets has sold, on average, 1,194 "Fudgie" Brownies per week. This week they introduced fat-free brownies and sold 214 at a price of $4 each. They noticed the cannibalization rate of fat-free brownies on Fugie brownies was 39%. Baker's Score's sells their "Fudgie" brownies for $3, with a variable cost of $1. The new Fat-free Brownies have a variable cost of $2. In week 2 "Fudgie" brownie sales dropped to 850 units sold, while sales for Fat-free brownies remained constant. If all of the decrease in Fudgie sales is due to the fat-free product, what would be the cannibalization rate based on week 2 sales figures instead of the previous week's?

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
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In the last year, Bakers Score's Donuts and sweets has sold, on average, 1,194 "Fudgie" Brownies per week. This week they introduced fat-free brownies and sold 214 at a price of $4 each. They noticed the cannibalization rate of fat-free brownies on Fugie brownies was 39%. Baker's Score's sells their "Fudgie" brownies for $3, with a variable cost of $1. The new Fat-free Brownies have a variable cost of $2.

In week 2 "Fudgie" brownie sales dropped to 850 units sold, while sales for Fat-free brownies remained constant. If all of the decrease in Fudgie sales is due to the fat-free product, what would be the cannibalization rate based on week 2 sales figures instead of the previous week's?

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