Glow Right Lighting Company is considering an investment in new equipment that will be used to manufacture a desk lamp. The desk lamp is expected to generate additional annual sales of 3,000 units at \($72\) per unit. The equipment has a cost of \($290,000,\) residual value of \($10,000,\) and a 10-year life. The equipment can only be used to manufacture the desk lamp. The cost to manufacture the lamp is shown below.

Determine the average rate of return on the equipment.

Transcribed Image Text:

Cost per unit: Direct labor Direct materials Factory overhead (including depreciation) Total cost per unit $20.00 32.00 12.00 $64.00