Dane Co. both purchases and constructs various equipment it uses in its operatio
ID: 2378383 • Letter: D
Question
Dane Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2011.Purchase
Cash paid for equipment, including sales tax of $6,100 $128,100
Freight and insurance cost while in transit 2,440
Cost of moving equipment into place at factory 3,782
Wage cost for technicians to test equipment 4,880
Insurance premium paid during first year of operation on this equipment 1,830
Special plumbing fixtures required for new equipment 9,760
Repair cost incurred in first year of operations related to this equipment 1,586
Construction
Material and purchased parts (gross cost $244,000;
failed to take 2% cash discount) $244,000
Imputed interest on funds used during construction (stock financing) 17,080
Labor costs 231,800
Allocated overhead costs (fixed–$20,000; variable–$30,000) 50,000
Profit on self-construction 36,600
Cost of installing equipment 5,368
Compute the total cost for each of these two pieces of equipment.
Explanation / Answer
I've left in the amounts that should be included with each cost. PURCHASE Cash paid for equipment, including sales tax of $9,700 $203,700 Freight and insurance cost while in transit 3,880 Cost of moving equipment into place at factory 6,014 Wage cost for technicians to test equipment 7,760 Special plumbing fixtures required for new equipment 15,520 Total Cost = $236,874 CONSTRUCTION Material and purchased parts (gross cost $388,000; failed to take 2% cash discount) $388,000 Labor costs 368,600 Allocated overhead costs (fixed–$20,000; variable–$30,000) 50,000 Cost of installing equipment 8,536 Total Cost = $815,136
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.