Question

4,Bubbly Waters currently sells 370 Class A spas, 520 Class C spas, and 270 deluxe model spas each year. The firm is considering adding a mid-class spa and expects that if it does, it can sell 445 units per year. However, if the new spa is added, Class A sales are expected to decline to 260 units while the Class C sales are expected to increase to 545. The sales of the deluxe model will not be affected. Class A spas sell for an average of $13,300 each. Class C spas are priced at $6,700 and the deluxe models sell for $17,700 each. The new mid-range spa will sell for $8,700. What annual sales figure should you use in your analysis?

Answer 1

Mid-class spa sales Less: Decrease in Class A spas Add: Increase in Class C spas 3,871,500445 8700 1,463,000 370-260) 13300 167,500 (545-520) *6700 Relavant annual sales for project $2,576,000