Determine the average rate of return on the equipment.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 3E: Average rate of returnnew product Hana Inc. is considering an investment in new equipment that will...
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Hana Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to generate additional annual sales of 10,000 units at $300 per unit. The equipment has a cost of $4,500,000, residual value of $500,000, and a 10-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows:
Cost per unit: | ||
Direct labor | $ 18.00 | |
Direct materials | 90.00 | |
Factory overhead (including |
112.00 | |
Total cost per unit | $220.00 |
Determine the average rate of return on the equipment.
fill in the blank 1 %
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