Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Matheson Electronics has just developed a new electronic device that it believes will have broad market appeal. The compamy has performed marketing and cost studies

image text in transcribed
Matheson Electronics has just developed a new electronic device that it believes will have broad market appeal. The compamy has performed marketing and cost studies thit revesled the foltowing information: a. New equipment would have to be acquired to produce the device. The equipment would cost $198,000 and have a sib-yeat useful tife. After slx yeurs, it would hove a salvage value of about $24,000. b. Sales in units ovgr the next six years are projected to be as follows? c. Production and sales of the device would require working capital of $52,000 to finance accounts receivabie, inverntorles, and dayto-day cash needs. This working capital would be released at the end of the project's iffe. d. The devices would sell for $50 each; variable costs for production, administration, and sales would be $35 per unh. e. Fixcd costs for salarles, maintenance, property taxes, Insurance, and straight-fine depreciatipn on the equipment would total $140,000 per year. (Depreciation is based on cost less salvage value.) 1. To gain rapid entry into the market, the company would have to advertise heavily. The advertising costs would be: g. The company's required rate of return is 12%. Click here to view Exhibit 781 and Exhibit 78-2. to determine the appropriate discount factor(s) using tables. Required: Matheson Electronics has just developed a new electronic device that it believes will have broad market appeal. The compamy has performed marketing and cost studies thit revesled the foltowing information: a. New equipment would have to be acquired to produce the device. The equipment would cost $198,000 and have a sib-yeat useful tife. After slx yeurs, it would hove a salvage value of about $24,000. b. Sales in units ovgr the next six years are projected to be as follows? c. Production and sales of the device would require working capital of $52,000 to finance accounts receivabie, inverntorles, and dayto-day cash needs. This working capital would be released at the end of the project's iffe. d. The devices would sell for $50 each; variable costs for production, administration, and sales would be $35 per unh. e. Fixcd costs for salarles, maintenance, property taxes, Insurance, and straight-fine depreciatipn on the equipment would total $140,000 per year. (Depreciation is based on cost less salvage value.) 1. To gain rapid entry into the market, the company would have to advertise heavily. The advertising costs would be: g. The company's required rate of return is 12%. Click here to view Exhibit 781 and Exhibit 78-2. to determine the appropriate discount factor(s) using tables. Required

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting College Version

Authors: Steven M. Bragg

1st Edition

1938910702, 978-1938910708

More Books

Students also viewed these Accounting questions

Question

What do their students end up doing when they graduate?

Answered: 1 week ago