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A Chinese Manufacturer of Ladies Blouses Has Plant and Equipment

Question 109

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A Chinese manufacturer of ladies blouses has plant and equipment costing the equivalent of $100,000 and are estimated to have a lifetime of 20 years.Straight-line depreciation is to be used.Additional fixed costs per year are $70,000.Variable costs are $2.50 and the price per unit is $3.75 What will annual profit be if the annual volume is 95,000 blouses?

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Annual depreciation = $100,000/20 years ...

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