Determine the total depreciation during the year.Determine the depreciation cost chargeable to each batch of 50 cu.m produced.
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Q: A machine costing $209,600 with a four-year life and an estimated $16,000 salvage value is installed…
A: Straight Line Method: It is the method of depreciation, the process of expensing an asset over a…
Q: A machine costing $209,600 with a four-year life and an estimated $16,000 salvage value is installed…
A: Straight-line Depreciation = (Original Cost - Salvage Value) / Useful Life Units of Production…
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A: Straight-line Depreciation method : Annual Depreciation = (Cost of Machine - Salvage Value ) /…
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
An asphalt and aggregate mixing plant having a capacity of 50 cu.m every hour costs P2,500,000. It is estimated to process 800,000 cu.m during its life. During a certain year, it processed 60,000 cu.m. If its scrap value is P100,000, Determine the total
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- A machine costing P 95,000 is expected to produce 10,000 units of a certain products during its entire life before being replaced. At the end of its life, it will have a scrap value of P 5,000. The cost of housing the machine is P 2,500 a year. The power consumption per unit is P 0.90 and the maintenance of the machine per unit will be P 0.70. Labor costs P 3.50 per unit. If depreciation is by declining balance method, determine the cost per unit in its 3rd year of operation if the annual production is 2500 units.Equipment costing P1M is expected to produce 10,000 pieces of pipes during its economic life before being replaced. Annual production of this equipment is 2,500 pipes. The equipment's scrap value is estimated at P50,000. The cost of housing the equipment is P25,000 per year. Costs of power and maintenahce per unit are P9.00 and P7.00, respectively. Cost of labor is P35.00 per unit. Use sinking fund method of depreciation with j=12%. What is the total fixed cost per unit? O P168.98 O P137.51 O P114.76 O P121.87A processing plant consumed 650,000 kW of electric energy annually and pays an average of P6.50 per kWh. Astudy is being made to generate its own power to supply the plant the energy required, and that the power plant installed would cost P6,500,000. Annual operation and maintenance, P1,230,000. Other expenses P305,000 per year. Life of power plant is 16 years; salvage value at the end of life is P550,000; annual taxes and insurances, 6.5% of first cost; and rate of interest is 20%. Using the sinking fund method for depreciation, determine if the power plant is justifiable.
- The Maria Company estimated its factory overhead of the next period at P160,000. It is estimated that 40,000 units will be produced at a materials cost of P200,000. Production will require 40,000 man-hours at an estimated wage cost of P80,000. The machines will run about 25,000 hours. How much is the Machine Depreciation Cost Driver rate?A company plans to manufacture a product and sell it for $3.00 per unit. Equipment to manufacture the product will cost $250,000 and will have a net salvage value of $12,000 at the end of its estimated economic life of 15 years. The equipment can manufacture up to 2,000,000 units per year. Direct labor costs are $0.25 per unit, direct material costs are $0.85 per unit, variable administrative and selling expenses are $0.25 per unit, and fixed overhead costs are $200,000, not including depreciation. If straight-line depreciation is used, what is the number of units that the company must manufacture and sell to yield a before-tax profit of 20%?A coal mine expected to contain 6.5 million tons of coal was purchased at a cost of $30 million. One million tons of coal for steel making are produced this year. The gross income for this coal is $15,000,000, and operating costs (excluding depletion expenses) are $1,850,000. If you know that coal has a 10% depletion allowance, what will be the depletion allowance? (a) Cost depletion.The cost depletion for the year is $? (b) What is the percentage of depletion
- The equipment needed to manufacture a product costs $1,000,000 to purchase. This equipment has a life of 5 years and a salvage value of $100,000. Fixed costs for this equipment are $50,000 per year while variable costs are $200 per unit of finished product. Assuming that an annual interest of 6% is used to account for the time value of money: (a) Find the equivalent uniform annual cost associated with this equipment when 10,000 units of finished product are produced each year. (b) Now suppose that each unit of finished product generates $300 in revenue. How many units need to be produced each year in order to break even on this equipment?A coal mine expected to contain 6.5 milliontons of coal was purchased at a cost of $30 million.One million tons of coal for steel making are produced this year. The gross income for this coal is$15,000,000 and operating costs (excluding depletion expenses) are $1,850,000. If you know that coalhas a 10% depletion allowance, what will be thedepletion allowance?(a) Cost depletion.(b) Percentage depletionThe cost of equipment to apply epoxy paint to a warehouse floor is $1400. Materials and supplies (masking tape, surface repair material, solvents, cleanup supplies, etc.) will cost $2.03 per ft2. Alternatively, a contractor can be hired annually to do the job for $3.25 per ft2. If the cost of the equipment will be recovered at i = 10% per year over a 3-year period with no salvage value, the number of square feet that must be treated each year to justify the equipment purchase is closest to: (a) 460 ft2 (b) 953 ft2 (c) 1148 ft2 (d) 2457 ft2
- Nature’s Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The garden tool is expected to generate additional annual sales of 9,100 units at $48 each. The new manufacturing equipment will cost $177,400 and is expected to have a 10-year life and $13,600 residual value. Selling expenses related to the new product are expected to be 5% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis: Direct labor $8.2 Direct materials 26.7 Fixed factory overhead-depreciation 1.8 Variable factory overhead 4.1 Total $40.8 Determine the net cash flows for the first year of the project, Years 2–9, and for the last year of the project. Use the minus sign to indicate cash outflows. Do not round your intermediate calculations but, if required, round your final answer to the nearest dollar. Nature’s Way Inc. Net Cash Flows Year 1 Years 2-9 Last Year Initial investment Operating cash…Two processes can be used for producing a polymer that reduces friction loss in engines. Process T will have a first cost of $640,000, an operating cost of $66,000 per year, and a salvage value of $80,000 after its 2-year life. Process W will have a first cost of $1,140,000, an operating cost of $25,000 per year, and a $120,000 salvage value after its 4-year life. Process W will also require updating at the end of year 2 at a cost of $90,000. Which process should be selected on the basis of a present worth analysis at a MARR of 12% per year? The present worth of process T is $- and the present worth of process W is $-[223662 The process selected on the basis of the present worth analysis is processYou are considering two types of machines fora manufacturing process.◼◼ Machine A has a first cost of $75,200, and itssalvage value at the end of six years of estimatedservice life is $21,000. The operating costs ofthis machine are estimated to be $6,800 per year.Extra income taxes are estimated at $2,400 peryear.◼◼ Machine B has a first cost of $44,000, and itssalvage value at the end of six years’ service isestimated to be negligible. The annual operatingcosts will be $11,500.Compare these two mutually exclusive alternativesby the present-worth method at i = 13%