Question
Average Rate of ReturnNew Product Arrowhead Inc. is considering an investment in new equipment that will be used to manufacture a mobile communications product. The
Average Rate of ReturnNew Product Arrowhead Inc. is considering an investment in new equipment that will be used to manufacture a mobile communications product. The product is expected to generate additional annual sales of 5,400 units at $320.00 per unit. The equipment has a cost of $502,200, residual value of $37,800, and an 8-year life. The equipment only can be used to manufacture the product. The cost to manufacture the product is shown next. Cost per unit: Direct labor $55.00 Direct materials 216.00 Factory overhead (including depreciation) 37.00 Total cost per unit $308.00 Determine the average rate of return on the equipment.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started