A company owner has asked his accountant to research the photocopier equipment available from vendors, and to recommend the two best equipment alternatives. The company owner will decide on one piece of equipment topurchase. The fee charged for the accountant’s research was $500. The accountant’s report produced the following information: Photocopier (A) Photocopier (B) Initial cost, including installation $6,500 $ 6,000 Economic life 5 years 5 years Scrap value at end of economic life -0- -0- Initial training cost $ 500 $ 700 Annual maintenance $ 400 $ 300 Annual wage cost $12,500 $12,500 REQUIRED 1. Which photocopier should the company owner choose? Why? 2. The company owner requested your help in preparing the coming year company budget. Please, guide him to the best method and appropriate type from your perspective.
A company owner has asked his accountant to research the photocopier equipment available from vendors, and to recommend the two best equipment alternatives. The company owner will decide on one piece of equipment topurchase. The fee charged for the accountant’s research was $500. The accountant’s report produced the following information: Photocopier (A) Photocopier (B) Initial cost, including installation $6,500 $ 6,000 Economic life 5 years 5 years Scrap value at end of economic life -0- -0- Initial training cost $ 500 $ 700 Annual maintenance $ 400 $ 300 Annual wage cost $12,500 $12,500 REQUIRED 1. Which photocopier should the company owner choose? Why? 2. The company owner requested your help in preparing the coming year company budget. Please, guide him to the best method and appropriate type from your perspective.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A company owner has asked his accountant to research the photocopier equipment available from vendors, and to recommend the two best equipment alternatives. The company owner will decide on one piece of equipment topurchase. The fee charged for the accountant’s research was $500. The accountant’s report produced the following information:
|
|
Photocopier (A) |
Photocopier (B) |
|
Initial cost, including installation |
$6,500 |
$ 6,000 |
|
Economic life |
5 years |
5 years |
|
Scrap value at end of economic life |
-0- |
-0- |
|
Initial training cost |
$ 500 |
$ 700 |
|
Annual maintenance |
$ 400 |
$ 300 |
|
Annual wage cost |
$12,500 |
$12,500 |
REQUIRED
1. Which photocopier should the company owner choose? Why?
2. The company owner requested your help in preparing the coming year company budget. Please, guide him to the best method and appropriate type from your perspective.
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