(2)NTPU enters the market with the selling price computed previously. However, despite growth in the overall market, sales are not as robust as the company had expected, and a competitor has priced its product $15.6 lower than NTPU's. Stark, the company's president, insists that the competitor must be pricing its product at a loss and that the competitor will be unable to sustain that. In response, NTPU makes no price adjustments but budgets production and sales for 2019 at 18,000 units. Variable and fixed costs are not expected to change. Compute NTPU's new selling price. Comment on how NTPU's choice of budgeted production affected its selling price and competitive position. (4%)

2. Hulk buys T-shirts in bulk, applies its own trendsetting silk-screen designs, and then sells the T-shirts to a number of retailers. Hulk wants to be known for its trendsetting designs, and it wants every teenager to be seen in a distinctive Hulk T-shirt. Hulk presents the following data for its first two years of operations, 2018 and 2019. | | | 2018 | 2019 | | --- | --- | --- | --- | | 1 | Number of T-shirts purchased | 225,500 | 257,000 | | 2 | Number of T-shirts discarded | 20,500 | 24,000 | | 3 | Number of T-shirts sold (row 1 — row 2) | 205,000 | 233,000 | | 4 | Average selling price | $ 32.00 | $ 33.00 | | 5 | Average cost per T-shirt | $ 17.00 | $ 15.00 | | 6 | Administrative capacity (number of customers) | 4,700 | 4,450 | | 7 | Administrative costs | $ 1,739,000 | $ 1,691,000 | | 8 | Administrative cost per customer (row 7 + row 6) | $ 370 | $ 380 | Administrative costs depend on the number of customers Hulk has created capacity to support, not on the actual number of customers served. Hulk had 4,300 customers in 2018 and 4,200 customers in 2019. Required: (1)Is Hulk's strategy one of product differentiation or cost leadership? Explain briefly. $(4\%)$

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