The Following Data Are Available for the South Division of Manhattan

question 6

Multiple Choice

The following data are available for the South Division of Manhattan Products, Inc. and the single product it makes:
$\begin{array}{lrr} \text { Unit selling price } &\$20\\ \text { Variable cost per unit } &\$12\\ \text { Annual fixed costs} &\$280,000\\ \text { Average operating assets } &\$1,500,000\\\end{array}$


How many units must South sell each year to have an ROI of 16%?

• A) 240,000.
• B) 1,300,000.
• C) 52,000.
• D) 65,000.

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Definitions:

Depreciation Expense

The method by which the cost of a tangible or physical asset is allocated over its useful life.

Building

The physical structure intended for housing, manufacturing, or any other commercial or industrial activity.

Electric Bill

A periodic charge for the use of electrical energy provided by a utility company or supplier.

Understated Assets

Occurs when the book value of assets is reported at less than their actual value on the financial statements, potentially misleading stakeholders.