Question

If a company adds 60 new workstations at a cost of $100,000 each and also spends $20 million for addition in its camera/drone assembly facilities to accommodate more workstations, then its annual depreciation costs rise by:
A. $26,000,000
B. $1,300,000
C. $1,040,000
D. $980,000
E. $1,750,000

Answer 1

Answer:

$1,300,000

Explanation:

Given:

Number of workstation = 60

Cost of each workstation = $100,000

Additional Cost = 20,000,000

Computation of total cost:

= Total work station cost + Additional cost

= ($100,000 x 60) + $20,000,000

= $6,000,000 + $20,000,000

= $26,000,000

Assume Depreciation rate = 5%

Deprecation = Total Cost x Depreciation rate

= $26,000,000 x 5%

= $1,300,000