Heer Enterprises needs someone to supply it with 160,000 cartons of machine screws per yearto support its manufacturing needs over the next three years, and you've decided to bid on thecontract. It will cost you $840,000 to install the equipment necessary to start production and youestimate that it can be salvaged for $160,000 at the end of the three-year contract. Your fixedproduction costs will be $290,000 per year, and your variable production costs should be $8.50per carton. If you require a 12 percent return on your investment, what is the minimum bid priceyou should submit?

1. No.of cartons of Screws Required for 3 years = 160000 cartons x 3 years = 480000 cartons 2.…

someone to supply it with 160,000 cartons of machine screws per year support its manufacturing needs over the next three years, and you've decided to bid on the contract. It will cost you $840,000 to install the equipment necessary to start production and you stimate that it can be salvaged for $160,000 at the end of the three-year contract. Your fixed roduction costs will be $290,000 per year, and your variable production costs should be $8.50 er carton. If you require a 12 percent return on your investment, what is the minimum bid price ou should submit?

someone to supply it with 160,000 cartons of machine screws per year support its manufacturing needs over the next three years, and you've decided to bid on the contract. It will cost you $840,000 to install the equipment necessary to start production and you stimate that it can be salvaged for $160,000 at the end of the three-year contract. Your fixed roduction costs will be $290,000 per year, and your variable production costs should be $8.50 er carton. If you require a 12 percent return on your investment, what is the minimum bid price ou should submit?

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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