Winnebagel Corp. currently sells 33,000 motor homes per year at $71,000 each, an

Question

Winnebagel Corp. currently sells 33,000 motor homes per year at $71,000 each, and 13,500 luxury motor coaches per year at $108,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 28,000 of these campers per year at $15,500 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

Annual sales figure before introducing camper: Motor homes Luxary motors Total Annual sales ($) Sales unit a 33,000 13,500 Price per unit b 71,000 108,000 Total sales value a*b 2,343,000,000 1,458,000,000 3,801,000,000 Annual sales figure after introducing camper: Motor homes Luxary motors Portable camper Total Annual sales ($) Sales unit a 35,400 12,400 28,000 Price per unit b 71,000 108,000 15,500 Total sales value a*b 2,513,400,000 1,339,200,000 434,000,000 4,286,600,000 Thus, Amount ($) Annual sales before introducing camper 3,801,000,000 and Annual sales after introducing camper 4,286,600,000 Increase in annual sales 485,600,000

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