Question

Walks Softly currently sells 14,800 pairs of shoes annually at an average price of $59 a pair. It is considering adding a lower-priced line of shoes that will be priced at $39 a pair. The company estimates it can sell 6,000 pairs of the lower-priced shoes annually but will sell 3,500 less pairs of the higher-priced shoes each year by doing so. What annual sales revenue should be used when evaluating the addition of the lower-priced shoes?

Answer 1

Sales=(lower priced shoes*lower priced per pair)-(higher priced shoes*higher priced per pair)
Sales=(6000*$39)-(3500*$59)
Sales=234000-206500
Sales=27500