Question

Bubbly Waters currently sells 470 Class A spas, 620 Class C spas, and 370 deluxe model spas each year. The firm is considering adding a mid-class spa and expects that if it does, it can sell 545 units per year. However, if the new spa is added, Class A sales are expected to decline to 310 units while the Class C sales are expected to increase to 645. The sales of the deluxe model will not be affected. Class A spas sell for an average of $15,300 each. Class C spas are priced at $7,700 and the deluxe models sell for $18,700 each. The new mid-range spa will sell for $9,700. What annual sales figure should you use in your analysis?

Answer 1

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