Sue Me Manufacturing Is Considering Producing a New Product

question 133

Multiple Choice

Sue Me Manufacturing is considering producing a new product.Sue Me Manufacturing expects to sell 2,000 units over the product's expected 4-year life.Variable production costs and variable selling costs are estimated at $42 and $16 per unit, respectively.Annual fixed production and fixed selling costs are estimated at $15,000 and $5,000, respectively.Research and development costs are estimated at $184,000.If the product sells for $200 per unit, the expected profit over the entire product life cycle is _____.

• A)$40,000)
• B)$20,000
• C)$204,000
• D)none of these answers is correct

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Definitions:

Creditors' Protection

Legal and financial mechanisms in place to ensure that creditors can reclaim some value from a borrower in case of default, insolvency, or bankruptcy.

Present Value

The immediate value of a prospective sum of money or stream of cash flows, using a specific interest rate for calculation.

Equivalent

A term expressing a state of equality or equivalency in value, function, or meaning.

Cash Held

Physical money held by a business in its cash registers or cash box, used for daily operations.