Ask Question
3 August, 20:06

Dave's Mirror Company produces $1,250,000 worth of mirrors this year. They expect to sell $1,000,000 worth of mirrors over the year. The company purchases $300,000 of new equipment during the year. Sales for the year turn out to be $900,000. Actual investment by Dave's Mirror Company equals _ and planned investment equals ___.

+4
Answers (1)
  1. 3 August, 20:08
    0
    Answer: The options are given below:

    A. $250,000; $150,000

    B. $300,000; $200,000

    C. $550,000; $450,000

    D. $650,000; $550,000

    The answer is D. $650,0000, $550,000

    Explanation:

    The sales for the year:

    Expected sales - actual sales

    => $1,000,000 - $900,000

    = $100,000

    Formula for actual investment is given as:

    Actual investment = planned investment + unplanned investment.

    To calculate planned investment, we have:

    Planned investment = planned production - expected sales

    => $1,250,000 - $1,000,000

    = $250,000

    Therefore, we have:

    Actual investment = planned investment + unplanned investment.

    => $250,000 + purchase of new equipment ($300,000)

    = $550,000.

    $550,000 + $100,000

    = $650,000

    Therefore,

    Ia = $650,000

    Ip = $550,000.

    Option D.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Dave's Mirror Company produces $1,250,000 worth of mirrors this year. They expect to sell $1,000,000 worth of mirrors over the year. The ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers