The Management of Nerby Corporation Is Considering Introducing a New

question 50

Multiple Choice

The management of Nerby Corporation is considering introducing a new product--a compact lawn blower. At a selling price of $28 per unit, management projects sales of 40,000 units. The lawn blower would require an investment of $900,000. The desired return on investment is 20%.
-The target cost per lawn blower is closest to:

• A)$28.20
• B)$23.50
• C)$33.60
• D)$28.00

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Definitions:

Depreciable Plant Assets

Long-term tangible assets used in the production of income that lose value over time and thus are subjected to depreciation accounting.

Balance Sheet

The Balance Sheet is a financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.

Marketable Securities

Financial instruments and assets that can easily be converted into cash without significant loss of value.

Investments

Investments refer to assets purchased with the intention of generating income or appreciation, including securities like stocks and bonds, real estate, or other vehicles.