Jalissa Inc. manufactures testing instruments for microcircuits. These instruments sell for $5,250 each. Jalissa Inc. incurs cash operating costs of $3,675 to manufacture these instruments. On January 1, 2016, Sanjoy Inc. bought a vacuum pump for $600,000. Sanjoy Inc. is considering the purchase of a new, more efficient pump on January 1, 2020 (4 years later). The new pump costs $930,000. The new pump is expected to have a terminal disposal price of $120,000 at the end of four years. At current rates of production, the new pump's greater efficiency will result in annual operating savings of $187,500. The old pump will be fully depreciated for accounting purposes by December 31, 2019, but it can still be used for another four years. It has a current disposal price of $75,000. If it is used for another four years, the pump's terminal disposal price will be zero. Jalissa Inc. can sell all the testing instruments it produces. Because of the increased speed of the new pump, output is expected to increase by 30 units in 2020, 50 units in 2021 and 2022, and 70 units in 2023. Over and above the annual cash savings at current production levels, Sanjoy's cash manufacturing costs will decrease by $225 per unit of all additional units produced. Sanjoy Inc. uses straight line depreciation on all assets, is subjected to a 25% tax rate and its cost of capital is 12% Calculate the initial investment Initial Investment Details The Big Tool Company has budgeted sales of $300,000 with the following budgeted costs: Direct materials $60,000 Direct manufacturing labor 35,000 Factory overhead Variable 30,000 Fixed 45,000 Selling and administrative expenses Variable 20,000 Fixed 25,000 Compute the average markup percentage for setting prices as a percentage of: a. The full cost of the product b. The variable cost of the product c. Variable manufacturing costs d. Total manufacturing costs R >