Excellent Motor Company makes electric cars and has two products, the Simplegreen and the Excellentgreen. To produce the Simplegreen, Excellent Motor employed assets of $10,500,000 at the beginning of 2017 and $14,450,000 of assets at the end of 2017. Other costs to manufacture the Simplegreen include the following: Direct materials $5,000 per unit Setup $1,500 per setup-hour Production $ 415 per machine-hour General administration and selling costs for Simplegreen total $7,820,000 in 2017. During the year, Excellent Motor produced 11,000 Simplegreen cars using 6,000 setup-hours and 139,000 machine-hours. It sold these cars for $12,000 each. Q. Calculate the residual income for Simplegreen if Excellent Motor has a required rate of return of 16% on investments.
Excellent Motor Company makes electric cars and has two products, the Simplegreen and the Excellentgreen. To produce the Simplegreen, Excellent Motor employed assets of $10,500,000 at the beginning of 2017 and $14,450,000 of assets at the end of 2017. Other costs to manufacture the Simplegreen include the following:
Direct materials $5,000 per unit
Setup $1,500 per setup-hour
Production $ 415 per machine-hour
General administration and selling costs for Simplegreen total $7,820,000 in 2017. During the year, Excellent Motor produced 11,000 Simplegreen cars using 6,000 setup-hours and 139,000 machine-hours. It sold these cars for $12,000 each.
Q. Calculate the residual income for Simplegreen if Excellent Motor has a required
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