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Sales of a product toy named Scooby estimated at 80,000 pieces annually with a rate of 6 pu. Its variable mfg costs are 2.50 pu with S&D and general expenses related to Scooby is 59,000 on annual basis. Its fixed manufacturing costs (excluding depreciation) at 45,000 on annual basis. Investment made is 350,000 with related to various moulds & equipment. The equipment have a 3 year life with ending salvage value of 20,000 where it was followed SLM depreciation.The rate of tax will be at 40%. Required:                Estimated increase in annual level of net income from the planned manufacture and sale of Scooby toys.

Sales of a product toy named Scooby estimated at 80,000 pieces annually with a rate of 6 pu. Its variable mfg costs are 2.50 pu with S&D and general expenses related to Scooby is 59,000 on annual basis. Its fixed manufacturing costs (excluding depreciation) at 45,000 on annual basis. Investment made is 350,000 with related to various moulds & equipment. The equipment have a 3 year life with ending salvage value of 20,000 where it was followed SLM depreciation.The rate of tax will be at 40%. Required:                Estimated increase in annual level of net income from the planned manufacture and sale of Scooby toys.

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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Sales of a product toy named Scooby estimated at 80,000 pieces annually with a rate of 6 pu. Its variable mfg costs are 2.50 pu with S&D and general expenses related to Scooby is 59,000 on annual basis. Its fixed manufacturing costs (excluding depreciation) at 45,000 on annual basis.

Investment made is 350,000 with related to various moulds & equipment. The equipment have a 3 year life with ending salvage value of 20,000 where it was followed SLM depreciation.The rate of tax will be at 40%.

Required:               

Estimated increase in annual level of net income from the planned manufacture and sale of Scooby toys.

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