You have been appointed manager of an operating division of Tallahassee Technology, Inc.,a manu- Problem 2.56 facturer

Question:

You have been appointed manager of an operating division of Tallahassee Technology, Inc.,a manu- Problem 2.56 facturer of products using the latest developments in microprocessor technology. Your division _!mpact of a Decision on manufactures the chip assembly, CH-1. On January 1 of this year, you invested $1 m i l l i o n i n a u t o m a t e d — n c o m e S t a t e m e n t s p r o c e s s i n g e q u i p m e n t f o r t h e c h i p a s s e m b l y . A t t h a t t i m e, y o u r e x p e c t e d i n c o m e s t a t e m e n t f o r t h i s y e a r (L O 4, 5) w a s a s f o l l o w s : S A l I S S M E V E M U C r e e s w e d s m i g s i n a s o n y « v a s t a n C h o y O y a e$ 1,590,000 Operating costs:
Variable (cash expenditures)................0,. $190,000 Fixedi(cashiex@emc(tUGes)anmm ane e uc esa enlee: 750,000 SO UPOMEMMCSOMCIENO Mas os Je adnec ne gice Sada aw ot 150,000 @inenGeOneciatiON

a. nmemas eaacstewae aaesa Le ben 125,000 NCHANG/TEENNCOOSIS. oc sass coue cause cee eee $1, 215, 000 O p e r a t i n g p r o f i t (b e f o r e t a x e s) . . . . . . . . . . . . . . .05 .$ 375,000