Average Rate of Return-New Product Hana Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to generate additional annual sales of 4,300 units at $319 per unit. The equipment has a cost of $399,900, residual value of $30,100, and an 8-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor $54.00 Direct materials 209.00 Factory overhead (including depreciation) 35.50 Total cost per unit $298.50 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. %. please answer do not image. Average Rate of Return-New ProductHana Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to generate additional annual sales of4,300 units at $319 per unit. The equipment has a cost of $399,900, residual value of $30,100, and an 8-year life. The equipment can only be used to manufacture thephone. The cost to manufacture the phone follows:Cost per unit:Direct laborDirect materialsFactory overhead (including depreciation)Total cost per unitDetermine the average rate of return on the equipment. If required, round to the nearest whole percent.$54.00209.0035.50$298.50

Average rate of return is one of the technique used for capital budgeting. Under this, it is…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Average Rate of Return-New Product Hana Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to generate additional annual sales of 4,300 units at $319 per unit. The equipment has a cost of $399,900, residual value of $30,100, and an 8-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor $54.00 Direct materials 209.00 Factory overhead (including depreciation) 35.50 Total cost per unit $298.50 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. %. please answer do not image.

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