ollogong Group Limited of New South Wales, Australia, acquired its factory building $10$ years ago. For several years, the company has rented out a small annex attached to the rear of the building for $$30,000$ per year. The renter$$s lease will expire soon, and rather than renewing the lease, the company has decided to use the annex to manufacture a new product.

Direct materials cost for the new product is $$80$ per unit. To have a place to store its finished goods, the company will rent a small warehouse for $$500$ per month. In addition, the company must rent equipment for $$4,000$ per month to produce the new product. Direct laborers will be hired and paid $$60$ per unit to manufacture the new product. As in prior years, the space in the annex will continue to be depreciated at $$8,000$ per year.

The annual advertising cost for the new product will be $$50,000.$ A supervisor will be hired and paid $$3,500$ per month to oversee production. Electricity for operating machines will be $$1\mathrm{.}20$ per unit. The cost of shipping the new product to customers will be $$9$ per unit.

To provide funds to purchase materials, meet payrolls, and so forth, the company will have to liquidate some temporary investments. These investments are presently earning a return of $$3,000$ per year.