Estimate Larson’s sales revenues from this model of backpack for the coming year. **Title: Estimating Future Sales Revenue for Larson, Inc.****Introduction:**Larson, Inc., a company specializing in the manufacture of backpacks, recently faced changes in market conditions and pricing strategies. Last year, Larson sold 85,000 units of its basic backpack model, each priced at $25, capturing a 20% share of the current market.**Market and Pricing Dynamics:**- **Market Growth:** The overall market is anticipated to grow by 15% in the coming year.- **Market Share:** As a result of rising competition, Larson’s market share is expected to decrease from 20% to 16%.- **Pricing Adjustment:** Due to competitive pricing strategies, Larson will reduce the price of their backpacks to $22 per unit. This change aligns with market trends and is not projected to affect sales volume.**Task:**- **Objective:** Calculate the estimated sales revenues for Larson's backpack model for the upcoming year, considering the changes in pricing and market conditions.**Solution:**To find the sales revenue, one must determine the new market size, apply the reduced market share, and compute the total revenue at the new pricing structure.*Note:* Estimate the revenue using the expected market conditions for the coming year.

Total market sales = Larson sales / marker share = 85000/20% = 425,000 units

Larson, Inc., manufactures backpacks. Last year, it sold 85,000 of its basic model for $25 per unit. The company estimates that this volume represents a 20 percent share of the current market. The market is expected to increase by 15 percent next year. Marketing specialists have determined that as a result of new competition, the company's market share will fall to 16 percent (of this larger market). Due to changes in prices, the new price for the backpacks will be $22 per unit. This new price is expected to be in line with the competition and have no effect on the volume estimates. Required: Estimate Larson's sales revenues from this model of backpack for the coming year. Sales revenue

Larson, Inc., manufactures backpacks. Last year, it sold 85,000 of its basic model for $25 per unit. The company estimates that this volume represents a 20 percent share of the current market. The market is expected to increase by 15 percent next year. Marketing specialists have determined that as a result of new competition, the company's market share will fall to 16 percent (of this larger market). Due to changes in prices, the new price for the backpacks will be $22 per unit. This new price is expected to be in line with the competition and have no effect on the volume estimates. Required: Estimate Larson's sales revenues from this model of backpack for the coming year. Sales revenue

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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