Walks Softly Currently Sells 14,800 Pairs of Shoes Annually at an Average

question 89

Multiple Choice

Walks Softly currently sells 14,800 pairs of shoes annually at an average price of $59 a pair.It is considering adding a lower-priced line of shoes that will be priced at $39 a pair.The company estimates it can sell 6,000 pairs of the lower-priced shoes annually but will sell 3,500 less pairs of the higher-priced shoes each year by doing so.What annual sales revenue should be used when evaluating the addition of the lower-priced shoes?

• A)$27,500
• B)$24,000
• C)$31,300
• D)$789,100
• E)$900,700

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Definitions:

Goodwill Impairment

A decrease in the value of goodwill, indicating that the acquired company is not performing as expected.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life.

Bond Coupon Rate

The interest rate stated on a bond when issued, which represents the annual interest payment divided by the bond's face value.

Unrealized Profit

A profit that has been generated on paper through an investment but has not yet been realized through a sale.