Innovating Motors Company makes electric cars and has two products, the iHybrid and the iBrilliant. To produce
Question:
Innovating Motors Company makes electric cars and has two products, the iHybrid and the iBrilliant. To produce the iHybrid, Innovating Motors employed assets of $10,500,000 at the beginning of 2017 and $14,450,000 of assets at the end of 2017. Other costs to manufacture the iHybrid include the following:
Direct materials $5,000 per unit
Setup $1,500 per setup-hour
Production $ 415 per machine-hour
General administration and selling costs for Simplegreen total $7,820,000 in 2017. During the year, Innovating Motors produced 11,000 iHybrid cars using 6,000 setup-hours and 139,000 machine-hours. It sold these cars for $12,000 each.
Required: i. Assuming that Innovating Motors defines investment as average assets during the period, what is the return on investment for the iHybrid division? (11 marks)