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Cocoa and Cookies Inc. is planning to add a new product to its line. To manufacture this product, the company will need to purchase
Cocoa and Cookies Inc. is planning to add a new product to its line. To manufacture this product, the company will need to purchase a new machine costing $820,000 with an expected 12-year useful life and a $70,000 salvage value. For this company, all sales are for cash and all costs are out-of-pocket, except for depreciation on the new machine. Sales and cost information: Expected annual sales of new product Expected annual costs of new product: $11,635,400 Direct Materials $2,283,000 Direct Labor $5,360,000 Overhead (does not $1,025,000 include depreciation) Selling, General, and $2,145,000 Administrative Expenses Income Tax Rate 21% TABLE 1
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