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5 August, 03:43

A small manufacturer that makes clothespins and other household products buys new injection molding equipment for a cost of $500,000. This will allow the manufacturer to make more clothespins in the same amount of time with an estimated increase in sales of 25%. If the manufacturer currently makes 75 tons of clothespins per year, which sell at $18,000 per ton, what will be the increase in revenue next year from the new equipment?

A) $837,500

B) $303,750

C) $125,000

D) $337,500

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Answers (1)
  1. 5 August, 04:24
    0
    The correct answer is D.

    Explanation:

    Giving the following information:

    New injection molding equipment for a cost of $500,000.

    Increase in sales of 25%.

    The manufacturer currently makes 75 tons of clothespins per year, which sell at $18,000 per ton.

    First, we need to calculate the new sales level:

    New sales (units) = 75t * 1.25 = 93.75 tons

    Increase in sales (dollars) = (93.75 - 75) * 18,000 = $337,500
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