Winnebagel Corp. currently sells 28,400 motor homes per year at $75,000 each and
ID: 2714501 • Letter: W
Question
Winnebagel Corp. currently sells 28,400 motor homes per year at $75,000 each and 7,400 luxury motor coaches per year at $117,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 23,400 of these campers per year at $21,000 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 3,000 units per year and reduce the sales of its motor coaches by 890 units per year.
Required: What is the amount to use as the annual sales figure when evaluating this project?
Explanation / Answer
Annual sales figure when evaluating this project = No of new portable camper *Sell price + Increase in sales of existing motor homes * Sell price - reduce of sales of its motor coaches * sell price
Annual sales figure when evaluating this project = 23400*21000 + 3000*75000 - 890*117000
Annual sales figure when evaluating this project = $ 612,270,000
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