Travel Limited currently sells 12,500 motor homes per year at $40,000 each and 6,000 luxury motorcoaches per year at $60,000 each. The company wants to introduce a new portable camper to fillout its product line; it hopes to sell 15,000 of these campers per year at $20,000 each. An independent consultant has determined that if Travel introduces the new campers, it should boost the sales of its existing motor homes to 13,500 units per year and reduce the sales of its motor coaches to 5,500 units per year. What is the amount to use as the annual sales figure when evaluating the project?

Question

Quizplus · Accepted Answer

The annual sales figure is calculated by adding the revenue from all products: (13,500 motor homes * $40,000) + (5,500 motorcoaches * $60,000) + (15,000 campers * $20,000) = $310,000,000.

Travel Limited Currently Sells 12,500 Motor Homes Per Year at $40,000