Winnebagel Corp. currently sells 28,300 motor homes per year at $74,500 each and

ID: 2648630 • Letter: W

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 Winnebagel 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.

What is the amount to use as the annual sales figure when evaluating this project? (Do not round intermediate calculations.)

Required:

What is the amount to use as the annual sales figure when evaluating this project? (Do not round intermediate calculations.)

Explanation / Answer

Ans - To calculate the amount to use as annual figures , we must consider two situations: A ) Before introducing a new portable camper and B) After the introduction of new portable camper.

Lets Consider A - Before introducing a new portable camper

Before the introduction of new portable campers, the sales of motor home would be $ 21083500000. ( =$ 74,500 * 28,300 ). The sales revenue from motor coaches would be $ 4776500000 ( = $ 23,300*20500 ).

So, the sales figure (Before introducing a new portable camper) is : $ 21083500000 + $ 4776500000.

So, the sales figure (Before introducing a new portable camper ) is : $ 2586000000.

Lets consider B - After the introduction of new portable camper.

It is mentioned that after the introduction of new campers, the sale of exsisting motor homes would increase by 2900 units per year. So after the introduction of new campers , Winnebagel Corp. would sell 31200 motor homes ( = 2900 + 28300 ) and the sales revenue from motor homes would be $ 2324400000.

The sale of motor coaches would be 6420 units ( = 7300-880 ) and the sales revenue of motor coaches will be $ 131610000.

So, the annual sales figure ( after the introduction of new campers ) would be : Sales Revenue from motor coaches + Sales Revenue from motor homes.

So, the annual sales figure ( after the introduction of new campers ) would be : $ 131610000 + $ 2324400000.