Walks Softly sells customized shoes. Currently, it sells 14,800 pairs of shoes a

Question

Walks Softly sells customized shoes. Currently, it sells 14,800 pairs of shoes annually at an average price of $59 a pair. It is considering adding a lower-priced line of shoes that will be priced at $39 a pair. Walks Softly estimates it can sell 6,000 pairs of the lower-priced shoes but will sell 3,500 less pairs of the higher-priced shoes by doing so. What annual sales revenue should be used when evaluating the addition of the lower-priced shoes?

A. 31,300 B 900,700 C. 789,100 D 24,000 E 27,500

Explanation / Answer

Walks Softly All Amounts in $ Sale Value of Lower Priced Shoes 234000 Sale Value of Higher-Priced Shoes 666700 Total 900700 Original Sales Revenue of Higher-Priced Shoes 873200 Incremental revenue from sale of lower priced shoes 27500

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