Food For Less (FFL), a grocery store, is considering offering one hour photo developing in their store. The firm expects that sales from the new one hour machine will be $150,000 per year. FFL currently offers overnight film processing with annual sales of $100,000. While many of the one hour photo sales will be to new customers, FFL estimates that 60% of their current overnight photo customers will switch and use the one hour service.The level of incremental sales associated with introducing the new one hour photo service is closest to:A) $90,000B) $150,000C) $60,000D) $120,000Suppose that of the 60% of FFL's current overnight photo customers, half would start taking their film to a competitor that offers one hour photo processing if FFL fails to offer the one hour service. The level of incremental sales in this case is closest to:A) $60,000B) $150,000C) $90,000D) $120,000

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andromache andromache · Answer 1 · 2019-11-27T08:13:35+01:00

Answer:

A) $90,000

D) $120,000

Explanation:

The computations are shown below:

Incremental sales in first case = Sales from the new one hour machine - annual sales × percentage given

= $150,000 - $100,000 × 60%

= $150,000 - $60,000

= $90,000

Increment sales in second case = Sales from the new one hour machine - annual sales × percentage given × half percentage

= $150,000 - $100,000 × 60% × 50%

= $150,000 - $30,000

= $120,000

Tundexi Tundexi · Answer 2 · 2022-03-25T13:30:02+01:00

The Incremental sales in first and second case includes $90,000 and $120,000 respectively.

= Sales from the new one hour machine - annual sales × percentage given

= $150,000 - ($100,000 × 60%)

= $150,000 - $60,000

= $90,000

Therefore, the Option A is correct.

= Sales from the new one hour machine - annual sales × percentage given × half percentage

= $150,000 - ($100,000 × 60% × 50%)

= $150,000 - $30,000

= $120,000

Therefore, the Option D is correct.