Erosion costs. Fat Tire Bicycle Company currently sells 39 comma 000 bicycles per year. The current bike is a standard balloon-tire bike selling for $120 , with a production and shipping cost of $35. The company is thinking of introducing an off-road bike with a projected selling price of $375 and a production and shipping cost of $250. The projected annual sales for the off-road bike are 17 comma 000. The company will lose sales in fat-tire bikes of 9 comma 000 units per year if it introduces the new bike, however. What is the erosion cost from the new bike? Should Fat Tire start producing the off-road bike? What is the erosion cost from the new bike?
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