Question

Walks Softly sells customized shoes. Currently, it sells 14,800 pairs of shoes annually at an average price of $79 a pair. The company is considering adding a lower-priced line of shoes that will sell for $59 a pair. The company estimates it can sell 4,800 pairs of the lower-priced shoes but will sell 1,900 less pairs of the higher-priced shoes by doing so. What is the amount of the sales that should be used when evaluating the addition of the lower-priced shoes?

Answer 1

Total sales of current period
Number of pair of shoes					14800
Multiply: Price of shoes					79
Current sales revenue						1169200
Total sales of Proposed changes
Number of high priced shoes			(14800-1900)	12900
Mutiply: price				79
Sales revenue					1019100
Number of pairs of low priced shoes				4800
Multiply: Price				59
Sales revenue					283200
Total sales under proposed changes						1302300
Net Incremental sales to be taken for analysis						133100