A small manufacturer that makes clothes-pegs and other household products buys new injection moulding equipment for a cost of $500,000. This will allow the manufacturer to make more pegs in the same amount of time with an estimated increase in sales of 15%. If the manufacturer currently makes 75 tonnes of pegs per year, which sell at $18,000 per tonne, what will be the increase in revenue next year from the new equipment?

Question

Quizplus · Accepted Answer

The current revenue from pegs is 75 tonnes * $18,000/tonne = $1,350,000. A 15% increase in sales would be 0.15 * $1,350,000 = $202,500.

A Small Manufacturer That Makes Clothes-Pegs and Other Household Products