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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 ___.

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abiolataiwo2015

Answer:

$650,0000, $550,000

Explanation:

Actual investment is planned investment plus unplanned investment.

Planned investment = planned production minus expected sales, or $1,250,000 - $1,000,000 = $250,000

$250,000+ purchase of new equipment ($300,000) = $550,000.

Expected sales -Sales for the year

$1,000,000 - $900,000 = $100,000

$550,000+$100,000=$650,000

Therefore Actual investment by Dave's Mirror Company equals $650,000 and planned investment equals $550,000

Tundexi

The actual investment equals $650,000 while the planned investment equals $550,000

Planned investment = Planned production - Expected sales

Planned investment = $1,250,000 - $1,000,000

Planned investment = $250,000

Actual investment = Planned investment  + Unplanned investment.

Actual investment = Planned investment + Purchase of new equipment + (Expected sales - Sales for the year)

Actual investment = $250,000 + $300,000 + ($1,000,000 - $900,000)

Actual investment = $250,000 + $300,000 + $100,000

Actual investment = $650,000.

Therefore, the actual investment equals $650,000 while the planned investment equals $550,000

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