Winnebagel Corp. currently sells 28,800 motor homes per year at $77,000 each and

Question

Winnebagel Corp. currently sells 28,800 motor homes per year at $77,000 each and 7,800 luxury motor coaches per year at $119,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 23,800 of these campers per year at $23,000 each. An independent consultant has determined that if the company introduces the new campers, it should boost the sales of its existing motor homes by 3,400 units per year and reduce the sales of its motor coaches by 930 units per year. What is the amount to use as the annual sales figure when evaluating this project? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Net sales $

Explanation / Answer

Answer:

Sales of New Portable Camper (New Product Line) = 23,800 *$23,000
Sales of New Portable Camper (New Product Line) = $547,400,000

Increase in Motor Homes sales, due to new Product Line = 3,400 * $77,000
Increase in Motor Homes sales, due to new Product Line = $261,800,000

Decrease in Luxury Motor Coached Sales, due to New Product Line = 930 * $119,000
Decrease in Luxury Motor Coached Sales, due to New Product Line = $110,670,000

Increase in sales of Motor Homes and Luxury Motor Coaches are relevant, while evaluating the New Line. The Increase and decrease in Sales of existing line will increase or decrease the Net Sales of New Product line.

Net Sales = $547,400,000 + 261,800,000 – 110,670,000
Net Sales = $698,530,000

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