Question
XYZ, a chain of full service automotive detailers, is considering introducing a new 15-minute car wash and wax service at one of its Houston locations.
XYZ, a chain of full service automotive detailers, is considering introducing a new 15-minute car wash and wax service at one of its Houston locations. The company expects that sales from the new 15-minute service will be
$150,000
per year. XYZ currently offers a 1-hour wash/wax/detail service with annual sales of
$275,000.
While many of the 15-minute sales will be to new customers who, in the past, could not wait a full hour to have their car detailed, XYZ estimates that
20%
of their 1-hour sales will be lost as a result of existing customers switching to thenew, faster service.
The level of incremental sales associated with introducing the new 15-minute wash/wax service that should be used when analyzing this project is closest to ________.
A.
$150,000
B.
$30,000
C.
$55,000
D.
$95,000
E.
$205,000
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