Answer:
Incremental sales= $586,100
Explanation:
Giving the following information:
It is considering adding a lower-priced line of handbags that sell for $79 each. The firm estimates it can sell 21,000 of the lower-priced handbags but expects to sell 7,200 less of the higher-priced handbags by doing so.
We need to consider not only the incremental sales of the lower-priced but also the decrease in the higher-priced handbags.
Low-priced= 21,000*79= $1,659,000
Canibalized sales= 7,200*149=(1,072,900)
Incremental sales= $586,100
