Cool Comfort Currently Sells 300 Class a Spas,450 Class C

question 52

Multiple Choice

Cool Comfort currently sells 300 Class A spas,450 Class C spas,and 200 deluxe model spas each year.The firm is considering adding a mid-class spa and expects that if it does it can sell 375 of them.However,if the new spa is added,Class A sales are expected to decline to 225 units while the Class C sales are expected to decline to 200.The sales of the deluxe model will not be affected.Class A spas sell for an average of $12,000 each.Class C spas are priced at $6,000 and the deluxe model sells for $17,000 each.The new mid-range spa will sell for $8,000.What is the value of the erosion?

• A)$600,000
• B)$1,200,000
• C)$1,800,000
• D)$2,400,000
• E)$3,900,000