Winn Corp. currently sells 9,820 motor homes per year at $45,500 each, and 3,680 luxury motor coaches per year at $89,700 each. The company wants to introduce a new portable camper to fill out its product line. It hopes to sell 4,000 of these campers per year at $14,750 each. An independent consultant has determined that if the new campers are introduced, sales of its existing motor homes will most likely increase by 250 units per year while the sales of its motor coaches will probably decline by 368 units per year. What is the amount that should be used as the annual sales figure when evaluating the portable camper project?

Question

Quizplus · Accepted Answer

The calculation for the annual sales figure when evaluating the portable camper project includes the sales from the new campers and the net effect on sales of existing products. - Sales from new campers = 4,000 units * $14,750 = $59,000,000- Increase in motor homes sales = 250 units * $45,500 = $11,375,000- Decrease in luxury motor coaches sales = 368 units * $89,700 = -$33,009,600Net effect on existing products = $11,375,000 - $33,009,600 = -$21,634,600Therefore, the total annual sales figure = $59,000,000 (new campers) + (-$21,634,600) (net effect on existing products) = $37,365,400.

Winn Corp Currently Sells 9,820 Motor Homes Per Year at $45,500