Jamie's Motor Home Sales currently sells 150 Class A motor homes, 220 Class C motor homes, and 215 pop-up trailers each
Posted: Wed Mar 30, 2022 3:49 pm
Jamie's Motor Home Sales currently sells 150 Class A motor
homes, 220 Class C motor homes, and 215 pop-up trailers each year.
They are considering adding a mid-range camper with expected annual
sales of 340 units. However, if the new camper is added, Class A
sales will decline to 100 units and the Class C camper sales will
decline to 180 units. The sales of pop-ups will not be affected.
Class A motor homes sell for an average of $170,000 each. Class C
homes are priced at $65,500, and the pop-ups sell for $8,000 each.
The new mid-range camper will sell for $39,900
What is the annual erosion cost of adding the mid-range
camper?
Erosion cost = $ (list this as an absolute value)
What is the total annual incremental cash flow from the new
product?
Incremental cash flow = $ (list as a positive or
negative, depending on if new revenue outweighs erosion costs)
homes, 220 Class C motor homes, and 215 pop-up trailers each year.
They are considering adding a mid-range camper with expected annual
sales of 340 units. However, if the new camper is added, Class A
sales will decline to 100 units and the Class C camper sales will
decline to 180 units. The sales of pop-ups will not be affected.
Class A motor homes sell for an average of $170,000 each. Class C
homes are priced at $65,500, and the pop-ups sell for $8,000 each.
The new mid-range camper will sell for $39,900
What is the annual erosion cost of adding the mid-range
camper?
Erosion cost = $ (list this as an absolute value)
What is the total annual incremental cash flow from the new
product?
Incremental cash flow = $ (list as a positive or
negative, depending on if new revenue outweighs erosion costs)