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Rama09 [41]
3 years ago
7

A company is considering the purchase of a new machine for $48,000. Management expects that the machine can produce sales of $16

,000 each year for the next 10 years. Expenses are expected to include direct aterials, direct labor, and factory overhead totaling $8,000 per year plus depreciation of $4,000 per year. All revenues and expenses except depreciation are on a cash basis. The payback period for the machine is?
Business
1 answer:
joja [24]3 years ago
5 0

Explanation & answer:

Cash basis, so all monies retain same values over the years.

Let x = payback period in years

Salvage value of machine

= 48000 - 4000x

Sales

= 16000x

Total revenue after x years

R = 16000x

Expenditures over x years

C = Cost of machine + materials + depreciation

= 48000 + 8000x + 4000x

= 48000 + 12000x

For payback

R = C

16000x = 48000 +12000x

Solve for x

x = 48000/4000 = 12 years

By that time, the machine has no more salvage value.

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6 0
3 years ago
Read 2 more answers
On July 1, Crowe Co. pays $15,000 to Zubin Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending
Neko [114]

Answer:

a.

July 1, Year 1

Prepaid Insurance                  $15000 Dr

     Cash                                       $15000 Cr

Dec 31, Year 1

Insurance expense                    $2500 Dr

    Prepaid Insurance                     $2500 Cr

b.

July 1, Year 1

Cash                                                  $15000 Dr

    Unearned Service revenue             $15000 Cr

Dec 31, Year 1

Unearned service revenue        $2500 Dr

    Service revenue                           $2500 Cr

Explanation:

a.

The company will record the cash going out of the business for prepaid insurance as credit and the asset account prepaid insurance as debit to record the prepayment of insurance for 3 years at the amount of $15000.

The insurance paid out is for 3 years. So, the per year insurance expense is,

Insurance expense per year = $15000 / 3 = $5000

The adjusting entry made on 31 december will record the insurance months consumed (6 months) as an expense and debit the insurance expense and credit the prepaid insurance asset account.

The insurance expense for 6 months = 5000 * 6/12 = $2500

b.

For the receiving company, the cash is being received and as the service will be provided later on, the cash received will be debited and the unearned service revenue will be credited.

As six months worth of cover has passed, on 31 December, the company will record service revenue for 6 months that is $2500 and debit the liability recorded under unearned service revenue.

4 0
3 years ago
After suffering a debilitating injury, Ahmad (47) retired on disability after teaching high-school math for several years. He ha
VMariaS [17]

Answer:

Ahmad must report his disability payments as income.

Explanation:

Disability payments are taxable only if the insurance premium was paid by Ahmad's employer (which happened in this case). If Ahmad had paid the premium himself, then the disability premiums would not be considered income. If the premiums had been paid by both Ahmad and his employer, then only the proportion paid by Ahmad's employer would have been taxed.

4 0
2 years ago
Which of the following types of venue is favored by small-business retailers?
kondor19780726 [428]
The type of venue that small-business retailers favor is C.SPECIALTY SHOP.

Being in a specialty shop, your products will be prominently displayed and competition is minimal <span>compared to other given venues.

Customers, looking for specific items that you can offer, usually  prefer going directly to the shops instead of wasting time looking around those bigger venues searching for items they need. </span>
8 0
3 years ago
The manufacturing overhead account is debited when ______.
Rufina [12.5K]

Production process involves different type of cost and expenses, manufacturing overhead account is one and it is debited when overhead applied is less than the actual overhead costs incurred.

<h3>What is manufacturing overhead cost?</h3>

It is the sum of all the indirect costs that were spent while manufacturing a product.

The amount in the manufacturing overhead account can either be a debit or credit.

It is a debit when the overhead is less than the actual overhead costs that were spent.

Therefore, The manufacturing overhead account is debited when the overhead applied is less than the actual overhead costs incurred.

Learn more manufacturing overhead accounts here

brainly.com/question/15739613

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