Winnebagel Corp. currently sells 39,000 motor homes per year at $77,000 each, an

Question

Winnebagel Corp. currently sells 39,000 motor homes per year at $77,000 each, and 16,500 luxury motor coaches per year at $114,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 34,000 of these campers per year at $18,500 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?

Winnebagel Corp. currently sells 39,000 motor homes per year at $77,000 each, and 16,500 luxury motor coaches per year at $114,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 34,000 of these campers per year at $18,500 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?

Explanation / Answer

New sales of portable campers = 34,000 * 18,500 = 629,000,000

Increased sales of motor homes = 2,400 * 77,000 = 184,800,000

Reduced sales of motor coaches = 1,100 * 114,000 = 125,400,000

So increase in sales = 629,000,000 + 184,800,000 - 125,400,000 = 688,400,000

Answer: Annual sales figure of new project = $ 688,400,000

Hope this helped ! Let me know in case of any queries.

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