Winnebagel Corp. currently sells 29,300 motor homes per year at $79,500 each and

Question

Winnebagel Corp. currently sells 29,300 motor homes per year at $79,500 each and 8,300 luxury motor coaches per year at $121,500 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 24,300 of these campers per year at $25,500 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 3,900 units per year and reduce the sales of its motor coaches by 980 units per year.

What is the amount to use as the annual sales figure when evaluating this project? (Do not round intermediate calculations.)

What is the amount to use as the annual sales figure when evaluating this project? (Do not round intermediate calculations.)

Explanation / Answer

Hi,

Please find the detailed answer as follows:

If the project is accepted, the sales figure would be:

Sales Value of Campers = Number of Units Expected to be Sold*Unit Price Per Camper = 24300*25500 = 619650000

+

Sales Value of Existing Motor Homes = Number of Units Expected to be Sold*Unit Price Per Motor Home = (29300 + 3900)*79500 = 2639400000

+

Sales Value of Motor Coaches = Number of Units Expected to be Sold*Unit Price Per Motor Coach = (8300 - 980)*121500 = 889380000

Total Sales Value = 619650000 + 2639400000 + 889380000 = 4148430000

Answer is 4148430000

Thanks.

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