Question

Winnebagel Corporation currently sells 28,000 motor homes per year at $84,000 each and 7,000 luxury coaches per year at $135,000 each. The company wants to introduce a new portable camper to fill out its product line. It hopes to sell 29,000 of these campers per year at $24,700 each. An independent cosultant has determined that if the company introduces the new campers, it could boost the sales of its existing motor homes by 2,500 per year and reduce the sale of luxury coaches by 750 per year. Wha tis the amount to use as the annual sales when evaluating this project

Answer 1

Answer:

$825,050,000

Explanation:

Calculation to determine the amount to use as the annual sales when evaluating this project

First step is to calculate the new product line sales

New product line sales =29,000*$24,700

New product line sales = $716,300,000

Second step is to calculate Increased sales of the motor home line

Increased sales=2,500*$84,000

Increased sales = $210,000,000

Third step is to calculate the loss in sales

Loss in sales=750*$135,000

Loss in sales= $101,250,000

Now let calculate the amount to use as the annual sales when evaluating this project

Net sales = $716,300,000 + $210,000,000 - $101,250,000

Net sales = $825,050,000

Therefore the amount to use as the annual sales when evaluating this project is $825,050,000