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Dmitry [639]
3 years ago
7

Which of the following is a fixed cost?

Business
1 answer:
Mice21 [21]3 years ago
3 0

Answer:

The answer is d. payment to hire a security worker to guard the gate to the factory around the clock.

Explanation:

Let re-visit to the concept of Fixed cost before applying to the questions.

Fixed costs are costs which are unchanged given changes in production level.

a. payment to a electric utility is not fixed cost because higher level of production required higher electricity consumption which leads to higher cost of electricity.

b. cost of raw material is not fixed cost because the higher the production level, the higher the raw material required for production.

c. wages to hire assembly line workers is not fixed cost because the higher the production level, the more workers required and the higher the wages will be.

d. payment to hire a security worker to guard the gate to the factory around the clock is fixed cost because regardless of the production level, the security worker will work for the same amount of time and receive the same level of payment as his workload is much likely to remain the same.

So, d is the correct choice.

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Answer:

$10,620

Explanation:

Depreciation for Year 1 = 0.202 × $50,000

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Depreciation for Year 2 = 0.323 × $50,000

                                       = $16,150

Depreciation for Year 3 = 0.194 × $50,000

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Depreciation for Year 4 = 0.125 × $50,000

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Accumulated depreciation = $10,100 + $16,150 + $9,700 + $6,250

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Book value of machine as on date of sale:

= Purchase price - Accumulated depreciation

= $50,000 - $42,200

= $7,800

Selling price = $12,500

Gain on sale of machine = $12,500 - $7,800

                                         = $4,700

Tax rate = 40%

Tax on capital gain = $4,700 × 0.40

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Net proceeds on sale of machine:

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= $12,500 - $1,880

= $10,620

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