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EX 25-3 Average rate of return-new product Obj. 2 Galactic Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to SHOW ME HOW generate additional annual sales of 6,000 units at $250 per unit. The equipment has a cost of $850,000, residual value of $50,000, and an eight- year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor $ 15.00 Direct materials 134.00 Factory overhead (including depreciation) Total cost per unit 33.50 $182.50 Determine the average rate of return on the equipment. Answer

EX 25-3 Average rate of return-new product Obj. 2 Galactic Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to SHOW ME HOW generate additional annual sales of 6,000 units at $250 per unit. The equipment has a cost of $850,000, residual value of $50,000, and an eight- year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor $ 15.00 Direct materials 134.00 Factory overhead (including depreciation) Total cost per unit 33.50 $182.50 Determine the average rate of return on the equipment. Answer

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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EX 25-3 Average rate of return-new product Obj. 2 Galactic Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to SHOW ME HOW generate additional annual sales of 6,000 units at $250 per unit. The equipment has a cost of $850,000, residual value of $50,000, and an eight- year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor $ 15.00 Direct materials 134.00 Factory overhead (including depreciation) Total cost per unit 33.50 $182.50 Determine the average rate of return on the equipment. Answer
Transcribed Image Text:EX 25-3 Average rate of return-new product Obj. 2 Galactic Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to SHOW ME HOW generate additional annual sales of 6,000 units at $250 per unit. The equipment has a cost of $850,000, residual value of $50,000, and an eight- year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor $ 15.00 Direct materials 134.00 Factory overhead (including depreciation) Total cost per unit 33.50 $182.50 Determine the average rate of return on the equipment. Answer
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