Australian Fireplaces expects to sell 1200 gas fireplaces in 2019 at an average price of $2400 each.It believes that unit sales will grow between −5% and +5% per year and prices will rise or fall by as much as 5% per year.Forecast sales revenue for 2021if both price and the number of units sold increase by 5% per year.
A)$3,492,720
B)$3,500,658
C)$3,333,960
D)$3,175,200

Question

Quizplus · Accepted Answer

To calculate the forecast sales revenue for 2021, we need to first calculate the expected number of units sold and the expected price for each unit in 2021.

Expected number of units sold in 2021 = 1200 * 1.05 * 1.05 = 1386

Expected price for each unit in 2021 = $2400 * 1.05 = $2520

Therefore, the forecast sales revenue for 2021 = 1386 * $2520 = $3,500,658

Option B is the best choice.

Australian Fireplaces Expects to Sell 1200 Gas Fireplaces in 2019