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31 August, 08:06

The Chester company will sell 100 units (x1000) of capacity from their Cat product line. Each unit of capacity is worth $6 plus $4 per automation rating. The Chester company will sell the capacity for 35% off. How much do they receive when the capacity is sold? Select: 1 $1,870,000 $1,190,000 $2,210,000 $3,400,000

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  1. 31 August, 11:52
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    Amount received = $2,210,000

    so correct option is $2,210,000

    Explanation:

    given data

    sell units = 100 units (x 1000) = 100000 units

    capacity worth = $6 + $4 per automation rating

    sell capacity = 35% off

    to find out

    How much do they receive when the capacity is sold

    solution

    we assume here that Automation rating is 7.0

    we get here first Cost per unit that is

    Cost per unit = $6 + $4 per automation rating

    Cost per unit = $6 + $4 * 7

    Cost per unit = $34

    and capacity worth will be here as

    capacity worth = Cost per unit * sell units ... 1

    put here value we get

    capacity worth = $34 * 100000

    capacity worth = $3,400,000

    so that here Amount received will be as

    Amount received = capacity worth * (1 - sell capacity) ... 2

    put here value we get

    Amount received = $3400000 * (1 - 35%)

    so they receive when the capacity is sold = $2,210,000

    so correct option is $2,210,000
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