Winnebagel Corp. currently sells 36,000 motor homes per year at $74,000 each, an

Question

Winnebagel Corp. currently sells 36,000 motor homes per year at $74,000 each, and 15,000 luxury motor coaches per year at $111,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 31,000 of these campers per year at $17,000 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 2,400 units per year, and reduce the sales of its motor coaches by 1,100 units per year What is the amount to use as the annual sales figure when evaluating this project? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.) Annual sales

Explanation / Answer

Solution:-

Ans:- $582,500,000

Calculation:-

i)Expected sale of new product line :-

                        = 31,000*$17,000= $527,000,000

ii)Increase in sale of motors homes due to the introduction of new product line

= 2,400*$74,000= $177,600,000

iii)Decrease in the sales of motor coaches due to the introduction of new product line

=1,100*$111,000=$122,100,000

The net sale figure to be used in evaluation the project

= $527,000,000+$177,600,000-$122,100,000

=$582,500,000

Hence the annual sales figure when evaluating this project=$582,500,000

Please feel free to ask if you have any query in the comment section.

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