Waterfront Shirts is a specialty retailer offering T-shirts, sweatshirts, and caps. Its most recent annual sales consisted of $14,000 of T-shirts, $11,000 of sweatshirts, and $1,300 of caps. The company is adding polo shirts to the line-up and projects that this addition will result in sales next year of $12,000 of T-shirts, $8,000 of sweatshirts, $7,800 of polo shirts, and $1,300 of caps. What sales amount should be used when evaluating the Polo shirt project?

Question

Quizplus · Accepted Answer

The sales amount for evaluating the Polo shirt project should be the incremental sales generated by the addition of polo shirts, which is the projected sales of polo shirts ($7,800) minus the decrease in sales of other products ($2,000 decrease in T-shirts and $3,000 decrease in sweatshirts), resulting in $2,800.

Waterfront Shirts Is a Specialty Retailer Offering T-Shirts, Sweatshirts, and Caps