You Have Compiled the Following Information for a Proposed Expansion

question 11

Multiple Choice

You have compiled the following information for a proposed expansion project.
Initial investment: $349,000
Fixed costs: $57,700
Variable costs: $112.64 per unit
Selling price: $224.90 per unit
Discount rate: 11 percent
Project life: 3 years
Tax rate: 35 percent

• A)1,368.02 units
• B)1,913.19 units
• C)1,366.16 units
• D)798.31 units
• E)1,228.17 units

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Definitions:

Manufacturing Overhead

All indirect costs associated with the manufacturing process, such as utilities, maintenance, and management salaries.

Markup

The sum added to the purchase price of products to account for overhead costs and profit, setting the sales price.

Selling Price

The amount a customer pays to purchase a product or service.

Manufacturing Costs

The total expense incurred in the process of producing or manufacturing goods, including direct materials, direct labor, and manufacturing overhead.