Winnebagel Corporation currently sells 20,000 motor homes per year at $103,000 eachand 14,000 luxury motor coaches per year at $155,000 each. The company wants tointroduce a new portable camper to fill out its product line; it hopes to sell 25,000 ofthese campers per year at $19,000 each. An independent consultant has determinedthat if the company introduces the new campers, it should boost the sales of its existingmotor homes by 2,700 units per year and reduce the sales of its motor coaches by 1,300units per year. What is the amount to use as the annual sales figure when evaluating thisproject? (Do not round intermediate calculations and enter your answer in dollars, notmillions of dollars, e.g., 1,234,567.)Annual sales

Sales revenue is one of important element of income statement. Sales revenue is product of sales…

Answered: Winnebagel Corporation currently sells…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Master Craft Corp. currently sells 22,000 motor homes per year at $58,000 each, and 16,000 luxury motor coaches per year at $110,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 7,000 of these campers per year at $22,000 each. An independent consultant has determined that if Master Craft introduces the new campers, it should boost the sales of its existing motor homes by 2,500 units per year and reduce the sales of its motor coaches by 1,200 units per year. This project increases the annual fixed costs by $2,000,000. Here are the costs per unit: Variable costs 50,000 99,000 17,000 Motor home $ Motor coach $ Portable camper $ The project requires buying new specialized equipment that costs $15,000,000. The company must pay $200,000 more for installation costs. The total cost could be depreciated at 20% per year (class 8). Note that the 50% rule applies. The equipment will have a resale value of $10,000,000 in three years. The…
Winnebagel Corporation currently sells 21,000 motor homes per year at $59,000 each, and 7,500 luxury motor coaches per year at $96,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 16,000 of these campers per year at $9,500 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 2,500 units per year and reduce the sales of its motor coaches by 1,200 units per year. What is the amount to use as the annual sales figure when evaluating this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Annual Slaes:
Winnebagel Corp. currently sells 28,100 motor homes per year at $73,500 each and 7,100 luxury motor coaches per year at $115,500 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 23,100 of these campers per year at $19,500 each. An independent consultant has determined that if the company introduces the new campers, it should boost the sales of its existing motor homes by 2,700 units per year and reduce the sales of its motor coaches by 860 units per year. What is the amount to use as the annual sales figure when evaluating this project? Net sales: $______
Winnebagel Corporation currently sells 33,000 motor homes per year at $71,000 each, and 13,500 luxury motor coaches per year at $108,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 28,000 of these campers per year at $15,500 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 2,400 units per year and reduce the sales of its motor coaches by 1,100 units per year. What is the amount to use as the annual sales figure when evaluating this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Annual sales
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Delicious Snacks, Inc. is considering adding a new line of candies to its current product line. The company already paid $300,000 for a marketing research study that provided evidence about the demand for this product at this time. The new line will require an additional investment of $70,000 in raw materials to produce the candies. The project’s life is 7 years and the firm estimates sales of 1,500,000 packages at a price of $1 per unit the first year; but this volume is expected to grow at 17% for the next two years, 12% for the following two years, and finally at 7% for the last two years of the project. The price per unit is expected to grow at the historical average rate of inflation of 3%. The variable costs will be 70% of sales and the fixed costs will be $500,000. The equipment required to produce the candies will cost $900,000, and will require an additional $30,000 to have it delivered and installed. This equipment has an expected useful life of 7 years and will be…
Realforce is considering making a new mechanical keyboard. The company has spent $200,000 in research for a silent mechanical switch, which they can use on the new keyboard. Realforce estimates that they can sell $5,000 units of the new keyboard per year at $250 per unit for the next 4 years. The production cost per keyboard is $200. The fixed costs for the project will run $50,000 per year. To start the production, Realforce has to invest a total of $400,000 in manufacturing equipment, The equipment will be 100 percent depreciated over a straight line basis for the next 4 years and become valueless at the end of the project. The tax rate is 35 percent and the discount rate is 15 percent. a) What is the operating cash flow for this project? b) What is the project's NPV? c) Suppose that the manu facturing equipment will have a market value of $18,000 at the end of the project and the project requires an initial investment in net working capital of $10,000, which is fully recoverable at…
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Elise Carpets Inc. has just acquired a new backing division that produces a rubber backing, which it sells for $3.30 per square yard. Sales are about 1,200,000 square yards per year. Since the Backing Division has a capacity of 2,000,000 square yards per year, top management is thinking that it might be wise for the company's Tufting Division to start purchasing from the newly acquired Backing Divi- sion. The Tufting Division now purchases 600,000 square yards per year from an outside supplier at a price of $3.00 per square yard. The current price is lower than the competitive $3.30 price as a result of the large quantity discounts. The Backing Division's cost per square yard follows. Direct materials.. Direct labor.... Variable overhead.. Fixed overhead (1,200,000 level) Total cost.... $1.80 0.45 0.37 0.15 $2.77 Required a. If both divisions are to be treated as investment centers and their performance evaluated by the ROI formula, what transfer price would you recommend? Why? b. If…
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