Question

Winnebagel Corp. currently sells 28,300 motor homes per year at $74,500 each and 7,300 luxury motor coaches per year at $116,500 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 23,300 of these campers per year at $20,500 each. An independent consultant has determined that if the company introduces the new campers, it should boost the sales of its existing motor homes by 2,900 units per year and reduce the sales of its motor coaches by 880 units per year.

Required:
What is the amount to use as the annual sales figure when evaluating this project?

Answer 1

Annual sales figure = $42,178.11

Step-by-step explanation:

The annual sales figure is the sum of the sales of campers and the additional sales of homes less of sales of motor coaches lost.

This is computed below:

$

Sales of camper 20,500

Motor homes (2,900/28,300× 74,500) = 7,634.28

Motor coaches (880/7,300× 116,500) = (14,043.84)

Annual sales figure 42,178.11

Annual sales figure = $42,178.11