Marketing Analysis
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Baldwin Bicycle Case Study
1. The relevant costs are those that occur in the future and differ for each feasible alternative. These relevant costs should be compared to the current situation at Baldwin in order to evaluate the decision to join with Hi-Valu:

Per units cost $83.90
R&D Cost (5000/25000) 0.2
Other variable costs** 18.44
Total $102.54
** 5.5% of assets
Added estimate of monthly inventory cost to balance sheet info to estimate avg assets
2 months materials
(25000 bikes/12 mo x 2 mo inv) x 38.90 $165,847
WIP inv (1000 x 83.90) 83900
Finished Goods (500 x 83.90) 41950
Inc to assets 291697
Current assets 8092000
Assets est 8383697
x.055 461103
divided by 25000 bikes 18.44
2. Cost of capital = 18% 102.54
cost per bike times 25000 bikes 25000
divide by 25000 bikes $18.46
3. Product cannibalization refers ot the phenomenon whereby a new product introduced by a firm competes with and reduces sales of the firms existing products. It can be argued that this is a negative incremental effect of the new product and the lost cash flows or profits from the

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Relevant Costs And Product Cannibalization. (April 15, 2021). Retrieved from