The production department is proposing the purchase of an automatic insertion machine. They have identified 3 machines and have asked the accountant to analyze them to determine the best average rate of return. Machine A Machine B Machine C
Estimated Average Income $45,192.56 $64,695.00 $60,929.70
Average Investment $322,804.00 $215,650.00 $406,198.00
Select the correct answer.
a) Machine B or C
b) Machine A
c) Machine C
d) Machine B

Option  D is correct

Machine B is the best investment

Explanation:

The accounting rate of return is the average annual income expressed as a percentage of the average investment.  

The simple rate of return can be calculated using the two formula below:

Accounting rate of return  =

Annual operating income/Average investment × 100

To determine the the machine with the best return,we would compute the average annual return of all of the machines and then choose the machine with the highest return

This is done as follows:

Machine             Working s                                   Average annul rate

A                   45,192.56/322,804.00 ×   100 =      14.0%

B                64,695.00/215,650.00 ×   100=           30.0%

C                  60,929.70/406,198.00×   100 =          15.0%

Machine B is the best investment

when consumers have more money to pay for a product, the most likely situation to occur from the possible options on the list is (2) an increase in price for computer and computer accessories will happen.

companies tend to price products according to production costs, but they also take into account how much money would a consumer in certain segments be willing to pay for their product. if they have more money, the products would definitely be priced higher.