Great Woods sells specialty equipment for mountain climbers. Its sales for last year included $238,000 of tents and $411,000 of climbing gear. For next year, management has decided to sell specialty sleeping bags also. As a result of this change, sales projections for next year are $254,000 of tents, $426,000 of climbing gear, and $51,000 of sleeping bags. How much of next year's sales are derived from the side effects of adding the new product to its sales offerings?

Question

Quizplus · Accepted Answer

To find out the amount of sales derived from the side effects of adding the new product, we need to subtract the projected sales of tents and climbing gear without the sleeping bags from their projected sales with the sleeping bags. 
Projected sales of tents without sleeping bags = $238,000 
Projected sales of tents with sleeping bags = $254,000 
Additional sales from adding sleeping bags = $254,000 - $238,000 = $16,000

Projected sales of climbing gear without sleeping bags = $411,000 
Projected sales of climbing gear with sleeping bags = $426,000 
Additional sales from adding sleeping bags = $426,000 - $411,000 = $15,000

Therefore, the total amount of next year's sales derived from the side effects of adding the new product is $16,000 + $15,000 = $31,000.

Great Woods Sells Specialty Equipment for Mountain Climbers