Question

Winnebagel Corp. currently sells 39,000 motor homes per year at $58,500 each, and 15,600 luxury motor coaches per year at $110,500 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 27,300 of these campers per year at $15,600 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 6,500 units per year, and reduce the sales of its motor coaches by 1,690 units per year. The amount to use as the annual sales figure when evaluating this project is______ $ . (Do not include the dollar sign ($). Enter your answer in dollars, not millions of dollars, e.g., $1,234,567.)

Answer 1

Motor Homes:

Increase in unit sales = 6,500
Selling price per unit = $58,500

Increase in sales = Increase in unit sales * Selling price per unit
Increase in sales = 6,500 * $58,500
Increase in sales = $380,250,000

Motor Coaches:

Increase in unit sales = 1,690
Selling price per unit = $110,500

Increase in sales = Increase in unit sales * Selling price per unit
Increase in sales = 1,690 * $110,500
Increase in sales = $186,745,000

Portable Camper:

Expected unit sales = 27,300
Selling price per unit = $15,600

Expected sales = Expected unit sales * Selling price per unit
Expected sales = 27,300 * $15,600
Expected sales = $425,880,000

Incremental sales revenue = Increase in Motor Homes sales + Increase in Motor Coaches sales + Expected sales of Portable Camper
Incremental sales revenue = $380,250,000 + $186,745,000 + $425,880,000
Incremental sales revenue = $992,875,000

The amount to use as the annual sales figure when evaluating this project is $992,875,000