During 20x1, Advanced Systems Introduced Complex Oil Well Monitoring Equipment

question 98

Essay

During 20x1, Advanced Systems introduced complex oil well monitoring equipment and produced 100 units in anticipation of selling to the major oil-producing companies. The first unit produced cost $125,000, and production costs are subject to a 90% learning curve. Note: ln(90%)/ ln(2)= -0.152.
During 20x1, the company sold 20 units and during 20x2, the company sold 40 units. Each unit sells for $100,000. If costs are assigned to cost of goods sold based on the average expected cost for all units in the 2001 production run, what is the company's gross profit during 20x2?

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Definitions:

Clear-Cut

Unambiguous or obvious, often used to describe decisions or distinctions that are straightforward and easily discerned.

Malaysian Palm Oil

A significant commodity export from Malaysia, palm oil is a vegetable oil obtained from the fruit of the African oil palm tree and is used in food, cosmetics, and biofuel.

Translation Statement

A financial statement that converts the figures from a foreign subsidiary's local currency into the parent company's reporting currency.

Issued Capital

Issued capital refers to the total value of a company's shares that have been issued to shareholders. This capital is a portion of the authorized share capital that the company has decided to sell.