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

Question

Quizplus · Accepted Answer

First, we need to calculate the total revenue generated from clothespins in the current year:

75 tons * $18,000/ton = $1,350,000

Next, we need to calculate the new revenue generated with the 15% increase in sales:

New sales = 1.15 * 75 tons = 86.25 tons
New revenue = 86.25 tons * $18,000/ton = $1,552,500

Finally, we need to calculate the increase in revenue:

New revenue - Current revenue = $1,552,500 - $1,350,000 = $202,500

Therefore, the answer is C.

A Small Manufacturer That Makes Clothespins and Other Household Products