Winnebagel Corp. currently sells 19,800 motor homes per year at $29,700 each, an

Question

Winnebagel Corp. currently sells 19,800 motor homes per year at $29,700 each, and 7920 luxury motor coaches per year at $56,100 each. The company wants to Introduce a new portable camper to fill out its product line; It hopes to sell 12,540 of these campers per year at $7,920 each. An Independent consultant has determined that If Winnebagel Introduces the new campers, lt should boost the sales of lts existing motor homes by 2,970 unlts per year, and reduce the sales of lts motor coaches by 594 units per year. Required: What Is the amount to use as the annual sales figure when evaluating this project? $220,849.200 O $161.912,520 $146,492,280 $99,316,800

Explanation / Answer

Company expects to sell 12,540 of new campers per year at $7,920 per camper.

Annual Sales of Camper = 12,540 * $7,920
Annual Sales of Camper = $99,316,800

If company introduce new product line sales of motor homes will increase by 2,970 units per year and sales of luxury motor coaches will decrease by 594 units

Change in Sale of Current Product lines = 2,970 * $29,700 - 594 * $56,100
Change in Sale of Current Product lines = $54,885,600

Incremental Sales = Annual Sales of Camper + Change in Sale of Current Product lines
Incremental Sales = $99,316,800 + $54,885,600
Incremental Sales = $154,202,400

So, annual sales used when evaluating this project is $154,202,400

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