A1 Winnebagel Corp. currently sells 30,000 motor homes per year at $73,000 each

Question

A1 Winnebagel Corp. currently sells 30,000 motor homes per year at $73,000 each and 12,000 luxury motor coaches per year at $120,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 25,000 of these campers per year at $19,000 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 2,700 units per year and reduce the sales of its motor coaches by 1,300 units per year.What is the amount to use as the annual sales figure when evaluating this project? Motor home price 73,000 $ 120,000 25,000 19,000 2,700 (1,300) Motor coach price 6 Camper quantity 8Camper price 9 Change in motor home quantity 0 Change in motor coach quantity 12 13 Complete the following analysis. Do not hard code values in your calculations. 14 15 16 Camper sales 17 Change in motor home sales Change in motor coach sales 19 Total sales

Explanation / Answer

The motor home sales would increase so they will be added to the total sales whereas the motor coaches sales would decrease so they will be deducted from the total sale. So, we have -

Camper Sales 25000 x $19000 = $475,000,000 Change in motor home sales +2700 x $73000 = +$197,100,000 Change in motor coach sales (-)1300 x $120000 = (-)$156,000,000 Total Sales $121,900,000

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