Question

Sherpa Outfitters sells specialty equipment for mountain climbers. Its sales for last year included $488,500 of tents and $800,000 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 $537,350 of tents, $880,000 of climbing gear, and $150,000 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?

Answer 1

$198,850

if you minus the $488,500 from $537,350, you come up with $48,850 so that's how much theyll make more on the tents alone and then you add the price of the sleeping bags being $150,000 plus $48,850 equals a total additional profit of $198,850 that derives from adding new product.

hope this helps