Answer:
Clothing Company
The incremental revenue generated from potential project is:
= $2,450,000.
Explanation:
a) Data and Calculations:
Alternative 1 Alternative 2
Units to be sold:
Sale of light-weight winter coat 35,700
Sale of medium weight winter coat 55,500 50,200
Sale of heavy weight winter coat 80,200 70,800
Total coats sold 135,700 156,700
Selling prices:
Lightweight winter coat = $190 per coat
Medium weight winter coat = $250 per coat
Heavy weight winter coat = $320 per coat
Revenue from Sales:
Alternative 1 Alternative 2 Increment
Units to be sold:
Light-weight winter coat $6,783,000 $6,783,000
(35,700*$190)
Medium weight winter coat $13,875,000 12,550,000 (1,325,000)
(55,500*$250) (50,200*$250)
Heavy weight winter coat 25,664,000 22,656,000 (3,008,000)
(80,200*$320) (70,800*$320)
Total sales revenue $39,539,000 $41,989,000 $2,450,000
b) The computations show that Clothing Company would earn additional $2,450,000 in revenue if it embarked on the new project of making and selling 35,700 lightweight winter coats.
