Nelson Heating and Ventilating Company estimates the coming year\'s sales revenu

Question

Nelson Heating and Ventilating Company estimates the coming year's sales revenue based on external data. The company's main business is shopping mall construction, and it uses the square footage of each mall as a "yardstick" for many financial statements and projections. The company does business in four Midwest states. Last year, it completed heating and ventilating systems in four shopping malls with an average size of 3,013,000 square feet for sales revenues of $9,628,000. Nelson is the primary contractor for one-third of the new malls in the four-state area. This coming year, 15 new malls are under construction with an average size of 4,445,000 square feet. What is Nelson's anticipated sales revenue for the coming year?

Explanation / Answer

First we need to calculate sales per square foot-

Sales per square foot = $9,628,000 / (4 × 3,013,000) = $0.798872 per square foot

Coming year Nelson will do work in 15 / 3 = 5 malls

Sales forecast for 5 malls= 5× 4,445,000 × $0.798872 = $17,754,920

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