Question

Great Woods sells specialty equipment for mountain climbers. Its sales for last year included $238,000 of tents and $411,000 of climbing gear. For next year, management has decided to sell specialty sleeping bags also. As a result of this change, sales projections for next year are $254,000 of tents, $426,000 of climbing gear, and $51,000 of sleeping bags. How much of next year's sales are derived from the side effects of adding the new product to its sales offerings?
A. $0
B. $15,500
C. $31,000
D. $51,000
E. $82,000

Answer 1

Conditions

Great Woods sells specialty equipment for mountain climbers. Its sales for last year included $238,000 of tents and $411,000 of climbing gear. For next year, management has decided to sell specialty sleeping bags also. As a result of this change, sales projections for next year are $254,000 of tents, $426,000 of climbing gear, and $51,000 of sleeping bags. How much of next year's sales are derived from the side effects of adding the new product to its sales offerings?

A. $0

B. $15,500

C. $31,000

D. $51,000

E. $82,000

Solution

The last year sales:

$$238000 + 411000 = 649000$$

Next year sales:

$$254000 + 426000 + 51000 = 722000$$ $$722000 - 649000 = 82000$$

Answer: The effect is +82000$