Problem 9-2 Relevant Cash Flows [LO 1] Winnebagel Corp. currently sells 28,900 m

Question

Problem 9-2 Relevant Cash Flows [LO 1]

Winnebagel Corp. currently sells 28,900 motor homes per year at $77,500 each and 7,900 luxury motor coaches per year at $119,500 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 23,900 of these campers per year at $23,500 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 3,500 units per year and reduce the sales of its motor coaches by 940 units per year.

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

Winnebagel Corp. currently sells 28,900 motor homes per year at $77,500 each and 7,900 luxury motor coaches per year at $119,500 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 23,900 of these campers per year at $23,500 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 3,500 units per year and reduce the sales of its motor coaches by 940 units per year.

Explanation / Answer

Annual Sales figure

Motor homes = 28,900X$77,500 = 2,239,750,000

Luxury motor coaches = 7900X$119,500 = 944,050,000

Annual sales= $ 3,183,800,000

New sales figure after introduction of New campers:-

Motor homes = 32400X$77,500 = $2,511,000,000

Motor coaches= 6960X$119,500 = $831,720,000

Total =$ 3,342,720,000

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