Crimpson Company has invested $2,200,000 in a plant to make commercial juicer machines. The target operating income desired from the plant is $306,000 annually. The company plans annual sales of 7700 juicer machines at a selling price of $300 each.
What is the cost base of each juicer machine for Crimpson Company?

Question

Quizplus · Accepted Answer

Sales revenue = 7700 units × $300 = $2,310,000
Cost base = [($2,310,000 - $306,000)/7700] = $260.26

Crimpson Company Has Invested $2,200,000 in a Plant to Make