Travel Coaches currently sells 14,000 motor homes per year at $94,000 each, and 1,500 luxury motor coaches per year at $159,000 each. The company wants to introduce a low-range camper to fill out its product line; it hopes to sell 6,000 of these campers per year at $14,500 each. An independent consultant has determined that if Travel Coaches introduces the new campers, it should boost the sales of its existing motor homes by 1,100 units per year, and reduce the sales of its luxury motor coaches by 450 units per year. What amount should be used as the annual sales figure when evaluating this project?

Question

Quizplus · Accepted Answer

To calculate the new annual sales, we need to add the sales of the new campers and the adjusted sales of the existing products after the introduction of the campers.

Adjusted sales of motor homes after the introduction of campers = 14,000 + 1,100 = 15,100

Adjusted sales of luxury motor coaches after the introduction of campers = 1,500 - 450 = 1,050

New annual sales = (15,100 x $94,000) + (1,050 x $159,000) + (6,000 x $14,500) = $1,427,900,000

Thus, the answer is C.

Travel Coaches Currently Sells 14,000 Motor Homes Per Year at $94,000