Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company produces 118,473 units of product A annually, which sold at an average price of $31.27 per unit. The company is considering the purchase

A company produces 118,473 units of product A annually, which sold at an average price of $31.27 per unit. The company is considering the purchase of a machine that can be used to improve the quality of products and that could sell for $40.14 per ton. The machine would cost $331,484 in annual depreciation and maintenance. 4 employees at a cost of $71,143 per year for each and a supervisor at a cost of $140,178 per year is required to operate the machine, and using the machine to improving each 1 unit of product consumes $0.92 of electricity. Insurance and taxes would cost an additional $176,508 per year. The company has an unused space for its product A's operation area could be used for the machine. The space constitutes 3% of the operation area. The operation are itself is leased at an annual cost of $3 million. The company spends $2,944,817 to produce the 118,473 units of product A, and all 118,473 units would be improved by the machine if the company purchased.

What is annual differential profit from buying the machine?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Frank Woods Business Accounting Volume 2

Authors: Frank Wood, Alan Sangster

10th Edition

0273693107, 978-0273693109

More Books

Students also viewed these Accounting questions

Question

nonmarket strategies are ultimately directed to whom

Answered: 1 week ago

Question

(1 point) Calculate 3 sin x cos x dx.

Answered: 1 week ago