Acc 520

Done

The expected dollar sales in year 1: a. 3.500.000 O b. 2.000.000 O c. 3.000.000 Ord. 2.500.000Use the following information to answer all questions: Management of XYZ are considering investing in a new business line for producing a new product. The following data are relevant to the business line: Business line machinery will cost $1,000,000 and have 10 years useful life and requires $50,000 maintenance annually Line will have a normal capacity to produce 100,000 units annually The line will be based in a factory rented and used by XYZ at $100,000 of which 40% will be allocated and charged to the business line. Below are the materials used in producing the product: Quantity Cost RM1 0.1 KG $200 per KG RM2 1 piece $100 per box of 20 pieces Salaries are paid as follows: Head office salaries $100,000 annually Factory labor $200,000 annually Sales staff $120,000 annually XYZ will charge the business line $50,000 annually for Administration services (such as accounting, HR and other service) At the end of year 5, the business line will be closed and the machinery will be sold to a third party for $450,000