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2 years ago

Purchase

Business

1 answer:

USPshnik [31]2 years ago

8 0

Answer:

The total cost to be capitalized for each of these two pieces of equipment:

Purchase equipment = $180,708

Construction equipment = $678,432

Explanation:

a) Data and Calculations:

Purchase

Cash paid for equipment, including sales tax of $7,400 $155,400

Freight and insurance cost while in transit 2,960

Cost of moving equipment into place at factory 4,588

Wage cost for technicians to test equipment 5,920

Special plumbing fixtures required for new equipment 11,840

Total cost to be capitalized = $180,708

Construction

Material and purchased parts (gross cost $296,000; failed to take 2% cash discount) $296,000

Imputed interest on funds used

during construction (stock financing) 20,720

Labor costs 281,200

Allocated overhead costs:

Fixed $29,600

Variable $44,400 74,000

Cost of installing equipment 6,512

Total capitalized costs = $678,432

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