The Baldwin company will sell 100 units (x1000) of capacity from their Bid product line. Each unit of capacity is worth $6 plus $4 per automation rating. The Baldwin company will sell the capacity for 35% off. How much do they receive when the capacity is sold? (Automation rating is 7.0) Select: 1

A. $1,190,000

B. $1,870,000

C. $2,210,000

correct option is C. $2,210,000

Explanation:

given data

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

capacity worth = $6 + $4 per automation rating

sell capacity is = 35%

Automation rating = 7.0

to find out

How much do they receive when the capacity is sold

solution

first we get here first Cost per unit that is

Cost per unit = $6 + $4 per automation rating ... 1

Cost per unit = $6 + $4 * 7

Cost per unit = $34

and capacity worth will be here as

capacity worth = Cost per unit * sell units ... 2

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) ... 3

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 C. $2,210,000