Question

Blue shoe currently sells 13,000 pairs of athletic shoes and 4,500 dress shoes every year. The athletic shoes sell for an average price of $79 a pair while the average price for the dress shoes is $49. The company is considering expanding its offerings to include sandals at a price of $29 a pair. Blue Shoe estimates the addition of sandals to its lineup will reduce its dress shoe sales by 1,000 pairs and increase its athletic shoe sales by 800 pairs annually. Blue Shoe expects to sell 4,500 pairs of sandals if it decides to carry them.

What amount should Blue Shoe use as the annual estimated sales revenue when it analyzes the addition of sandals to its lineup?

Answer 1