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sweet [91]
3 years ago
10

During the current year, the company purchased equipment for $212,000 on October 1. It is estimated the equipment will have a us

eful life of 8 years and a salvage value of $12,000. Estimated production is 40,000 units and estimated working hours are 20,000. During the current year, the company uses the equipment for 525 hours and the equipment produced 1,000 unites. The company uses December 31 as its fiscal year end.
Part 1: For the current year, compute depreciation expense using the straight-line method.
Part 2: For the current year, compute depreciation expense using the activity method (units of output).
Part 3: For the current year, compute depreciation expense using the activity method (working hours).
Business
1 answer:
qwelly [4]3 years ago
7 0

Answer:

$6250

$5000

$5250

Explanation:

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

($212,000 - $12,000) / 8 = $25,000

The machine was used for only 3 months in the fiscal year. Thus, the depreciation expense = $25,000 x (3/12) = $6250

Activity method based on output = (output produced that year / total output of the machine) x (Cost of asset - Salvage value)

(1000 / 40,000) x ($212,000 - $12,000) = $5000

Activity method based on hours worked = (hours worked that year / total hours of the machine) x  (Cost of asset - Salvage value)

($212,000 - $12,000) x (525 / 20,0000)  = $5250

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pashok25 [27]

Answer and Explanation:

1. The total amount of traceable fixed manufacturing overhead is given below:-

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Number of units produced   100,000       100,000

Traceable fixed

manufacturing overhead      $16                 $18

Total amount of traceable fixed

manufacturing overhead $1,600,000  $1,800,000

2. The total amount of common fixed expenses is given below:-

                                                 Alpha            Beta

Number of units produced   100,000       100,000

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manufacturing overhead       $15                 $10

Total amount of common fixed

manufacturing overhead     $1,500,000  $1,000,000

3. The computation of increase or decrease of profit is shown below:-

Selling price                        $80

Less: Variable cost

Direct material                   ($30)

Direct labor                        ($20)

Variable manufacturing

overhead                             ($7)

Contribution margin           $23

Less: Variable selling

expenses                            ($12)

Profit per unit                       $11

Total profit increase

(10,000 × $11)                      $110,000

The computation of increase or decrease of profit is as shown below:-

Selling price                        $39

Less: Variable cost

Direct material                   ($12)

Direct labor                        ($15)

Variable manufacturing

overhead                             ($5)

Contribution margin           $7

Less: Variable selling

expenses                            ($8)

Profit per unit                       ($1)

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4 0
3 years ago
What is the balance of the manufacturing overhead account and is overhead underapplied or overapplied at the end of the year?.
baherus [9]

The balance of the manufacturer overhead account is Credit of $30,000, overapplied.

  • credit of $30,000, overapplied.

<h3>Underapplied Overhead vs. Overapplied Overhead</h3>

Underapplied overhead is the opposite of overapplied overhead. Overapplied overhead occurs when expenses incurred are actually less than what a company accounts for in its budget. This means that a company comes in under budget and achieves a lower amount of overhead costs during the accounting period.

Therefore, the correct answer is as given above.

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3 0
2 years ago
If interest rates increase from 9 percent to 10 percent, a bank with a duration gap of 2 years would experience a decrease in it
Rasek [7]

The duration gap is calculated by subtracting the duration of the liabilities from the duration of the activity of the financial entities. Thus, in this case, the net worth of  1.8 percent of its assets.

<h3>What do you mean by Duration Gap?</h3>

Duration Gap refers to the term used by funds, banks, pensions, or many financial institutions to estimate the risk because of changed interest rates.

Also, if we have a negative duration gap means that the market value of equity will increase when interest rates rise.

Thus, in this case, If interest rates increase from 9 percent to 10 percent, a bank with a duration gap of 2 years would experience a decrease in its net worth of 1.8 percent of its assets.

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Answer:

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