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

Question

Business

Kirsten Decker

26 July, 10:36

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

+1

Answers (1)

Know the Answer?

Lilah Campos · Answer 1

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