Winnebagel Corp. currently sells 29,400 motor homes per year at $44,100 each, and 11,760 luxury motor coaches per year at $83,300 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 20,580 of these campers per year at $11,760 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 4,900 units per year, and reduce the sales of its motor coaches by 1,274 units per year. The amount to use as the annual sales figure when evaluating this project is $. Recall that the annual sales figure to use for a project in project analysis is the sales that are relevant for that project, which are the incremental sales, which means that side effects from other parts of the firm are relevant, not total sales from those parts of the firm

Question

Winnebagel Corp. currently sells 29,400 motor homes per year at $44,100 each, and 11,760 luxury motor coaches per year at $83,300 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 20,580 of these campers per year at $11,760 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 4,900 units per year, and reduce the sales of its motor coaches by 1,274 units per year. The amount to use as the annual sales figure when evaluating this project is $. Recall that the annual sales figure to use for a project in project analysis is the sales that are relevant for that project, which are the incremental sales, which means that side effects from other parts of the firm are relevant, not total sales from those parts of the firm

Answer 1

you would calculate as follows:

Only the income that results from this project is going to be counted.
So, all "currently sells X at $" info is ignored!

New project:
20580 x $11760
+ 4900 x $44100
+ -1274 x $83300 (we sell less of these)
=351986600

Answer 2

To determine the annual sales figure to use when evaluating the introduction of the new portable camper, we need to calculate the incremental sales for the motor homes and motor coaches.

First, let's calculate the incremental sales for the motor homes. The independent consultant determined that introducing the new campers would boost the sales of the existing motor homes by 4,900 units per year. Currently, Winnebagel Corp. sells 29,400 motor homes per year. So, the new sales figure for motor homes would be:

29,400 + 4,900 = 34,300 motor homes per year

Now, let's calculate the incremental sales for the motor coaches. The consultant determined that introducing the new campers would reduce the sales of motor coaches by 1,274 units per year. Currently, Winnebagel Corp. sells 11,760 motor coaches per year. So, the new sales figure for motor coaches would be:

11,760 - 1,274 = 10,486 motor coaches per year

Finally, to get the annual sales figure to use for evaluating the project, we sum up the sales figures for motor homes, motor coaches, and the new campers:

34,300 motor homes per year + 10,486 motor coaches per year + 20,580 new campers per year

= 65,366 units per year

Therefore, the annual sales figure to use when evaluating this project is 65,366 units per year.