Micro Tek 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 7,000 units at $272 per unit. The equipment has a cost of $651,000, residual value of $49,000, 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 $47.00 Direct materials 183.00 Factory overhead (including depreciation) 31.50 Total cost per unit $261.50 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. fill in the blank 1 %
Micro Tek 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 7,000 units at $272 per unit. The equipment has a cost of $651,000, residual value of $49,000, 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 $47.00 Direct materials 183.00 Factory overhead (including depreciation) 31.50 Total cost per unit $261.50 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. fill in the blank 1 %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Micro Tek 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 7,000 units at $272 per unit. The equipment has a cost of $651,000, residual value of $49,000, 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 | $47.00 | ||
| Direct materials | 183.00 | ||
| Factory |
31.50 | ||
| Total cost per unit | $261.50 |
Determine the average rate of return on the equipment. If required, round to the nearest whole percent.
fill in the blank 1 %
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