The Sledge Hammer Company manufactures a line of high quality tools.The company sold 1,000,000 hammers at a price of $4 per unit last year.The company estimates that this volume represents a 20% share of the current hammers market.The market is expected to increase by 5%.Marketing specialists have determined that,as a result of a new advertising campaign and packaging,the company will increase its share of this larger market to 24%.Due to changes in prices,the new price for the hammer will be $4.30 per unit.This new price is expected to be in line with the competition and have no effect on the volume estimates.What are the estimated sales revenues in the coming year?

Question

Quizplus · Accepted Answer

- The current market size can be calculated as: 
1,000,000 hammers/20% market share = 5,000,000 total hammers sold in the market
- With a 5% increase in the market, the new total market size would be:
5,000,000 hammers + (5% increase x 5,000,000 hammers) = 5,250,000 hammers
- The Sledge Hammer Company is expected to increase its market share to 24%, meaning they will sell:
5,250,000 hammers x 24% market share = 1,260,000 Sledge Hammers sold
- The price per unit is $4.30, so the estimated sales revenue can be calculated as:
1,260,000 hammers x $4.30 per unit = $5,418,000
Therefore, the answer is C.

The Sledge Hammer Company Manufactures a Line of High Quality