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

First, we need to calculate the current revenue from peg sales:

75 tonnes/year x $18,000/tonne = $1,350,000/year

Next, we need to calculate the estimated increase in revenue from the new equipment:

15% increase in sales = 0.15 x $1,350,000 = $202,500

Therefore, the increase in revenue next year from the new equipment will be $202,500.

A Small Manufacturer That Makes Clothes Pegs and Other Household