Question

Cyber Security Systems had sales of 3,500 units at $75 per unit last year. The marketing manager projects a 30 percent increase in unit volume sales this year with a 40 percent price increase. Returned merchandise will represent 8 percent of total sales. What is your net dollar sales projection for this year?

Short answer

The net dollar sale projection of the company for this year is $439,530.

Step-by-step solution

Increase in units sold

$\begin{array}{rcl}\mathrm{Increased}\mathrm{units}\mathrm{sold}& =& \mathrm{Current}\mathrm{units}\mathrm{sold}\times \left(1+\mathrm{Incriment}\right)\\ & =& 3,500\times \left(1+0.30\right)\\ & =& 4,550\end{array}$

Increase in unit price

$\begin{array}{rcl}\mathrm{Increase}\mathrm{in}\mathrm{unit}\mathrm{price}& =& \mathrm{Unit}\mathrm{price}\times \left(1+\mathrm{Incriment}\right)\\ & =& \$75\times \left(1+0.40\right)\\ & =& \$105\end{array}$

Increased sales volume

$\begin{array}{rcl}\mathrm{Sales}\mathrm{volume}& =& \mathrm{Increased}\mathrm{units}\mathrm{sold}\times \mathrm{Increased}\mathrm{unit}\mathrm{price}\\ & =& 4,550\times \$105\\ & =& \$477,750\end{array}$

Returned merchandise

$\begin{array}{rcl}\mathrm{Returned}\mathrm{merchandise}& =& \mathrm{Total}\mathrm{sales}\mathrm{volume}\times \mathrm{Return}\mathrm{percentage}\\ & =& \$477,750\times 8\%\\ & =& \$38,220\end{array}$

Net dollars sales projections of the company for this year

$\begin{array}{rcl}\mathrm{Net}\mathrm{dollar}\mathrm{sales}\mathrm{projection}& =& \mathrm{Total}\mathrm{sales}\mathrm{volume}-\mathrm{Returned}\mathrm{merchandise}\\ & =& \$477,750-\$38,220\\ & =& \$439,530\end{array}$