Question

Typewritten answers only, no handwritten answers!

NewCar Inc plans to sell a new model auto kit to dealers at $8,000 per car.

The consumer assembles the car in approximately 4 hours.

Below is additional information on the project.

NewCar Inc's investment in the project $1,000,000.00 (one million dollars).

Material cost per car $5,000

Labor cost per car $ 1,000

Factory Overheard $ 200,000

Distribution (delivery) per car $ 500

Advertising $20,000

Manufacturer’s suggested retail price $10,000

Based on pieces of information in your possession, calculate the following:

Realize 12% return on his investment at the end of the first year of operation. How much would that be?

Typewritten answers only, no handwritten answers!

Answer 1

Investment of New Car is $10,00,000

12% return=$1000000*12%= $1,20,000 need to earn. So we need to find out how many car need to manufacture.

Return+Factory Overhead+Advertising which will be $120000+$200000+$20000=$3,40,000

Variable Cost=$5000+$1000+$500=$6500

Sales price less variable cost= $8000-$6500=$1500

Car need to manufacture for 12% return= $340000/$1500=226.67 or 227 no of card need to manufacture for 12% return on investment.