Larson, Inc., manufactures backpacks. Last year, it sold 87,500 of its basic mod

Question

Larson, Inc., manufactures backpacks. Last year, it sold 87,500 of its basic model for $20 per unit. The company estimates that this volume represents a 25 percent share of the current market. The market is expected to increase by 20 percent next year. Marketing specialists have determined that as a result of new competition, the company’s market share will fall to 20 percent (of this larger market). Due to changes in prices, the new price for the backpacks will be $17 per unit. This new price is expected to be in line with the competition and have no effect on the volume estimates.

Larson, Inc., manufactures backpacks. Last year, it sold 87,500 of its basic model for $20 per unit. The company estimates that this volume represents a 25 percent share of the current market. The market is expected to increase by 20 percent next year. Marketing specialists have determined that as a result of new competition, the company's market share will fall to 20 percent (of this larger market). Due to changes in prices, the new price for the backpacks will be $17 per unit. This new price is expected to be in line with the competition and have no effect on the volume estimates. Required Estimate Larson's sales revenues from this model of backpack for the coming year. revenue

Explanation / Answer

Current market sales total = 87500/25%= 350000 Next year market sales = 350000*1.2= 420000 Sales revenue = 420000*20%*17= 1428000

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