Question

Use the information for the question(s) below.Food For Less (FFL), a grocery store, is considering offering one hour photo developing in their store. The firm expects that sales from the new one-hour machine will be $150,000 per year. FFL currently offers overnight film processing with annual sales of $100,000. While many of the one-hour photo sales will be to new customers, FFL estimates that 60% of their current overnight photo customers will switch and use the one-hour service.The level of incremental sales associated with introducing the new one-hour photo service is closest to:

Answer 1

$90,000

Step-by-step explanation:

Calculation for what the level of incremental sales associated with introducing the new one-hour photo service is closest to:

Using the formula

Incremental Sales Asscoiated with new service = Firm Expected Sales - (Annual Sales * Percentage of Sales)

Let plug in the formula

Incremental Sales Asscoiated with new service= $150,000 - ($100,000 × 60%)

Incremental Sales Asscoiated with new service= $150,000 - $60,000

Incremental Sales Asscoiated with new service= $90,000

Therefore the level of incremental sales associated with introducing the new one-hour photo service is closest to:$90,000