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Cornucopia Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 4,000 units at $68 each. The new manufacturing equipment will cost $107,000 and is expected to have a 10-year life and $13,000 residual value. Selling expenses related to the new product are expected to be 5% of sales revenue. The cost to manufacture the product includs the following on a per-unit basis:

Cost per units:

Direct labor $9.00

Direct materials 36.00

Factory overhead (depreciation) 2.35

Varialbe factory overhead 4.65

EQUALS

Total $52.00

Determine the net cash flows for the first year of the project, Years 2-9, and for the last year of the project.

Year 1 = $47,200

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9961544

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