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Average rate of return-new product Oahu 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 4,200 units at $177 per unit. The equipment has a cost of $351,500, residual value of $26,500, and an 8-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor Direct materials Factory overhead (including depreciation) $30.00 115.00 18.95 Total cost per unit $163.95 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. %

Average rate of return-new product Oahu 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 4,200 units at $177 per unit. The equipment has a cost of $351,500, residual value of $26,500, and an 8-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor Direct materials Factory overhead (including depreciation) $30.00 115.00 18.95 Total cost per unit $163.95 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. %

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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Average rate of return-new product Oahu 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 4,200 units at $177 per unit. The equipment has a cost of $351,500, residual value of $26,500, and an 8-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor Direct materials Factory overhead (including depreciation) $30.00 115.00 18.95 Total cost per unit $163.95 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. %
Transcribed Image Text:Average rate of return-new product Oahu 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 4,200 units at $177 per unit. The equipment has a cost of $351,500, residual value of $26,500, and an 8-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor Direct materials Factory overhead (including depreciation) $30.00 115.00 18.95 Total cost per unit $163.95 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. %
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