Answer the following questions using the information below:
Botany Manufacturers has invested $1 000 000 in a plant to make commercial juicer machines.The target operating profit desired from the plant is $180 000 annually.The company plans annual sales of 7000 juicer machines at a selling price of $200 each.
-What is the cost base of each juicer machine for Botany Manufacturers?

Question

Quizplus · Accepted Answer

The cost base of each juicer machine can be calculated by subtracting the desired profit from the total revenue and then dividing by the number of units. Total revenue is 7000 machines * $200 = $1,400,000. Desired profit is $180,000. So, the total cost is $1,400,000 - $180,000 = $1,220,000. Dividing this by 7000 units gives a cost base of $174 per machine.

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