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A manufacturer of high-performance pumps has the cost and profit data given in the following table. The company invests $1.2M in an aggressive two-year design
A manufacturer of high-performance pumps has the cost and profit data given in the following table. The company invests $1.2M in an aggressive two-year design and development program to increase productivity by 20%. This will also increase the overhead by 20%. When this is completed, what will be the profit for the improved design case? Existing Design Improved design Sales price $500 $500 FEEDER Units sold 20,000 20,000 Net sales $10M $10M Direct labor $1.5M Materials $5.0M Overhead $2.OM Cost of product sold $8.5M Gross Margin $1.5M Total operating expenses $1.0M Pretax profit $0.5M % Profit 5% Please do not include % symbol with your
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