Winnebagel Corp. currently sells 34,000 motor homes per year at $72,000 each, an

Question

Winnebagel Corp. currently sells 34,000 motor homes per year at $72,000 each, and 14,000 luxury motor coaches per year at $109,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 29,000 of these campers per year at $16,000 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 2,500 units per year, and reduce the sales of its motor coaches by 1,200 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, i.e. 1,234,567.)

Winnebagel Corp. currently sells 34,000 motor homes per year at $72,000 each, and 14,000 luxury motor coaches per year at $109,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 29,000 of these campers per year at $16,000 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 2,500 units per year, and reduce the sales of its motor coaches by 1,200 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, i.e. 1,234,567.)

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Sales of New Camper = Units*Selling Price Per Camper = 29000*16000 = 464000000

+

Increase in Sales of Motor Homes = (Additional Units)*Selling Price Per Motor Home = (2500)*72000 = 180000000

+

Decline in Sales of Luxury Motor Coaches = (Reduced Units)*Selling Price Per Luxury Motor Coach = (1200)*109000 = 130800000

Total Annual Sales = 464000000 + 180000000 - 130800000 = $513200000

Answer is $513200000.

Thanks.

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