Sandra has developed a new product that she has decided to produce and market. Sandra has found a small building to rent for $1500 a month that will house the production facilities. One major piece of equipment that will be used to manufacture the product will be rented for $300 a month. Sandra purchased all of the other needed tools for $3,000 which will last for two years and depreciation expense will be $125 per month. Material costs to make the product are estimated at $3 per unit. Sandra is expecting to spend about 0.25 hour for production of each unit and she is planning a pay rate of $32 per hour for herself. Monthly advertising costs for the product are estimated at $800. Sandra is planning to pay $2 commission for sale of each unit. She is expecting to sell 1000 units each month at a price of $18 each. Compute the amount of profit that Sandra will be making per unit. Carry up to two decimal points.
Sandra has developed a new product that she has decided to produce and market. Sandra has found a small building to rent for $1500 a month that will house the production facilities. One major piece of equipment that will be used to manufacture the product will be rented for $300 a month. Sandra purchased all of the other needed tools for $3,000 which will last for two years and depreciation expense will be $125 per month. Material costs to make the product are estimated at $3 per unit. Sandra is expecting to spend about 0.25 hour for production of each unit and she is planning a pay rate of $32 per hour for herself. Monthly advertising costs for the product are estimated at $800. Sandra is planning to pay $2 commission for sale of each unit. She is expecting to sell 1000 units each month at a price of $18 each. Compute the amount of profit that Sandra will be making per unit. Carry up to two decimal points.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sandra has developed a new product that she has decided to produce and market.
Sandra has found a small building to rent for $1500 a month that will house the
production facilities. One major piece of equipment that will be used to manufacture
the product will be rented for $300 a month. Sandra purchased all of the other
needed tools for $3,000 which will last for two years and depreciation expense will
be $125 per month.
Material costs to make the product are estimated at $3 per unit. Sandra is expecting
to spend about 0.25 hour for production of each unit and she is planning a pay rate
of $32 per hour for herself. Monthly advertising costs for the product are estimated
at $800. Sandra is planning to pay $2 commission for sale of each unit. She is
expecting to sell 1000 units each month at a price of $18 each.
Compute the amount of profit that Sandra will be making per unit. Carry up to two
decimal points.
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