Question

Winnebagel Corp. currently sells 30,000 motorhomes per year at $45,000 each, and 12,000 luxury motor coaches per year at $85,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 19,000 of these campers per year at $12,000 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motorhomes by 4,500 units per year, and reduce the sales of its motor coaches by 900 units per year.
Required: What is the amount to use as the annual sales figure when evaluating this project?
a. $336,300,000 b. $354,000,000 c. $371,700,000 d. $507,000,000 e. $228,000,000

Answer 1

Answer:

b. $354,000,000

Explanation:

Sales revenue from new portable campers     $228,000,000

(19,000 campers * $12,000)

Add: Increased revenue from motor homes    $202,500,000

(4,500 unit * $45,000 )

Less: Decreased revenue from Luxury             $76,500,000

motor coaches (900 unit * $85,000 )                                          

Annual sales figure when evaluating this      $354,000,000

project