Food For Less (FFL), a grocery store, is considering offering one-hour photo dev
ID: 2521479 • Letter: F
Question
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 $20,000 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 40% of their current overnight photo customers will switch and use the one-hour se i e. The level ot incremental sales associated with introducing the new one hour photo service is closest to: OA.-$20,000 O B. $8,000 OC. $40,000 O D. $20,000Explanation / Answer
Current annual sales = 100,000
Drop in current sales = 40%
Overnight film processing sales drop to 60,000 [100,000 - (100,000*40%)]
Annual New one-hour machine sales = 20,000
Total sales after one-hour photo diving is offered = 60,000 + 20,000 = 80,000
Drop in total sales = 100,000 - 80,000 = 20,000
Incremental sales = (20,000)
The answer is A.