Winnebagel Corp. currently sells 15,000 motor homes per year at $22,500 each, and 6,000 luxury motor coaches per year at $42,500 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 9,500 of these campers per year at $6,000 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 2,250 units per year, and reduce the sales of its motor coaches by 450 units per year. Required:
What is the amount to use as the annual sales figure when evaluating this project?

$88,500,000

Explanation:

Calculation to determine What is the amount to use as the annual sales figure when evaluating this project

Campers sale revenue $57,000,000

(9,500*$6,000)

Add: Increase in motor homes sales $50,625,000

(2,250 units*$22,500 each)

Less: Decrease in luxury motor coaches ($19,125,000)

(450 units per year*$42,500 each)

Annual sales figure $88,500,000

($57,000,000+$50,625,000-$19,125,000)

Therefore the amount to use as the annual sales figure when evaluating this project is $88,500,000

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