Question

Winnebagel Corp. currently sells 28,200 motor homes per year at $74,000 each and 7,200 luxury motor coaches per year at $116,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 23,200 of these campers per year at $20,000 each. An independent consultant has determined that if the company introduces the new campers, it should boost the sales of its existing motor homes by 2,800 units per year and reduce the sales of its motor coaches by 870 units per year.
  
What is the amount to use as the annual sales figure when evaluating this project? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Net sales            $

Answer 1

Sales due solely to the new product line are:

23,200($20,000) = $464,000,000

Increased sales of the motor home line occur because of the new product line introduction; thus:

2,800($74,000) = $207,200,000

In new sales is relevant. Erosion of luxury motor coach sales is also due to the new mid-size campers; thus:

870($116,000) = $100,920,000

Loss in sales is relevant. The net sales figure to use in evaluating the new line is thus:

Net sales = $464,000,000 + $207,200,000 – $100,920,000

Net sales = $570,280,000