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Karolina [17]
3 years ago
6

Williams Company purchased a machine costing $25,000 and is depreciating over a 10-year estimated useful life with a residual va

lue of $3,000. At the beginning of the eighth year, a major overhaul on it was completed at a cost of $8,000, and the total estimated useful life was changed to 12 years with the residual value unchanged. How much is the year 8 depreciation expense assuming use of the straight-line depreciation method
Business
1 answer:
xxTIMURxx [149]3 years ago
8 0

Answer:

$3,100

Explanation:

We need to determine the carrying value of the machine after 8 years as a starting point in this analysis.

annual depreciation expense=cost-residual value/useful life

cost= $25,000

residual value=$3,000

useful life=10 years

annual depreciation expense=($25000-$3000)/10

annual depreciation expense=$2,200

accumulated depreciation for 8 years=$2,200*8=$17,600

carrying value after 8 years=cost-accumulated depreciation for 8 years

carrying value after 8 years=$25,000-$17,600=$7,400

The cost of the major overhaul would increase the carrying value with both amounts depreciation over the remaining 4 years since the useful life has been increased from 10 to 12 years

year 8 depreciation=(carrying value afte

year 8 depreciation=($7,400+$8,000-$r 8 years+cost of the overhaul-residual value)/remaining useful life 3,000)/4

year 8 depreciation=$3,100

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The Missing Link Chain-Link Fence Company is trying to determine how many chain-link fabricating machines to buy for its factory
OleMash [197]

Answer:

Explanation:

What is given:

The price of a new fabricating machine - 60

The price of a one-year-old machine - 51

The real interest rate is 10% per year

Marginal product of fabricating machines 165-2K (K - desired number machines)

If calculate the depreciation, (60-51)/51 = 15%

a) Find user cost of capital

User cost of capital is the sum of interest rate and depreciation cost multiplied by the price of new machine

= 60*(0.10+0.15) = 15 units

b) Determine the number of machines that will allow Missing Link to maximize its profit

165-2K=15

2K = 150

K = 75 machines

c)

Suppose that Missing Link must pay a tax equal to 40% of its gross revenue. What is the optimal number of machines for the company?

165-2K = 15/(1-0.4)

165-2K=14/0.6

165-2K=25

2K=140

K=70 macines

4 0
3 years ago
The Restaurant Group manufactures the bags of frozen French fries used at its franchised restaurants. Last​ week, purchased and
pishuonlain [190]

Answer:

Explanation:

The question was missing the actual amount of potatoes used and their actual price = 98,000 pounds at $0.85 per pound:

1. Determine the direct material price and quantity variances.

direct materials price variance = AQ x (AP - SP) = 98,000 x ($0.85 - $1) = $14,700 favorable

direct material quantity variance =  SP x (AQ - SQ) = $1 x (98,000 - 95,000) = $3,000 unfavorable

2. Think of a plausible explanation for the variances found in Requirement 1

Since the actual price of potatoes was less than the standard price, the price variance was favorable. But since the actual quantity used was more than the standard quantity, the quantity variance was unfavorable.

3. Determine the direct labor rate and efficiency variances.

direct labor rate variance = AH x (AR - SR) = 2,100 x ($12.45 - $12.15) = $630 unfavorable

direct labor efficiency variance = SR x (AH - SH) = $14.15 x (2,100 - 2,000) = $1,415 unfavorable

4. Could the explanation for the labor variances be tied to the material's variances?

Probably the labor efficiency variance since more materials had to be processed, but the labor rate variance is completely independent from the materials variances.

8 0
3 years ago
Sox Corporation purchased a 30% interest in Hack Corporation for $1,825,000 on January 1, 2021. On November 1, 2021, Hack declar
Kazeer [188]

Answer:

the loss reported is $1,135,000

Explanation:

The computation of the amount of loss reported is shown below:

Investment cost $1,825,000  

Less: Share of Dividends received -$690,000 ($2,300,000 × 30%)  

Carrying value of investment $1,135,000  

Share of net loss $1,320,000  ($4,400,000 × 30%)

It should be limited to the carrying value of an investment

Hence, the loss reported is $1,135,000

8 0
3 years ago
Sheryl’s Shipping had sales last year of $10,000. The cost of goods sold was $6,500, general and administrative expenses were $1
Amiraneli [1.4K]

Answer:

What are earnings before interest and taxes?

To find this figure, we substract the cost of goods sold, general and administrative expenses, and depreciaction expense from the total sales:

Earnings Before Interest and Taxes (EBIT) = $10,000 - $6,500 - $1,000 - $1,000 = $1,500

What is net income?

To find the net income, we take the EBIT we found above, and substract from it the interest expense, which gives us the taxable income:

Taxable Income = $1,500 - $500

                           = $1,000

Now that we have the taxable income, we multiply this figure by the tax rate, to obtain the tax expense.

Tax expense = $1,000 x 35%

                      = $350

Finally, our net income is equal to the taxable income minus the tax expense:

Net Income = $1,000 - $350

                    = $650

What is cash flow from operations?

We add the non-cash expenses to net income to find this figure. In this case, we only have one non-cash expense: depreciation expense.

Cash flow from operations = $650 + $1,000

                                              = $1,650

8 0
3 years ago
Comparing perfect first degree price discrimination to perfect competition one can conclude that: (i) Total social surplus is th
marta [7]

Answer:

C. Both (i) and (ii) are true

Explanation:

Under perfect price discrimination, consumer surplus doesn't exist since the supplier is selling the good or service at the maximum price that each consumer is willing to pay. This situation maximizes supplier surplus.

Under perfect competition, both supplier and consumer surplus exist.

Since total social surplus = supplier surplus + consumer surplus, total surplus should be the same in both situations.

5 0
3 years ago
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