At the beginning of the year, Oakmont Company bought three used machines from Am

Question

At the beginning of the year, Oakmont Company bought three used machines from American Manufacturing, Inc. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts.

At the beginning of the year, Oakmont Company bought three used machines from American Manufacturing, Inc. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts.

Machine A Machine B Machine C Amount paid for asset Installation costs Renovation costs prior to use Repairs after production began $21,600 $12,100 $11,800 600 1,100 980 1,300 1,100 620 700 400 2,900 By the end of the first year, each machine had been operating 4,000 hours Required: 1. Compute the cost of each machine. Cost of Machine MachineA Machine B Machine C

Explanation / Answer

1) Compute cost of machine :

Journal entry :

Cost of machine machine A 21600+1300+1100 = 24000 Machine B 12100+700+400 = 13200 Machine C 11800+600+1100 = 13500

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