Ethel Company manufactures and sells desk lamps for hotel and motel rooms. Last year, it sold 270,000 units of its model Y lamp for $60 per unit. The company estimates that this volume represents a 25 percent share of the current market. The market is expected to increase by 8 percent next year. Marketing specialists have determined that as a result of new competition, the company’s market share will fall to 20 percent (of this larger market). Due to changes in production costs and competitive models, the new price for the lamps will be $63 per unit. The revised volume estimates are based on the $63 price. Required: Estimate Ethel Company’s sales revenues from model Y lamps for the coming year.
Ethel Company manufactures and sells desk lamps for hotel and motel rooms. Last year, it sold 270,000 units of its model Y lamp for $60 per unit. The company estimates that this volume represents a 25 percent share of the current market. The market is expected to increase by 8 percent next year. Marketing specialists have determined that as a result of new competition, the company’s market share will fall to 20 percent (of this larger market). Due to changes in production costs and competitive models, the new price for the lamps will be $63 per unit. The revised volume estimates are based on the $63 price.
Required:
Estimate Ethel Company’s sales revenues from model Y lamps for the coming year.
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