Question

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

Answer 1

Answer:

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